Infrastructure investors and pension funds have been drawn to the sector, attracted by long-term contracts, high cash flow yields and exposure to climate change-related policies. Some estimates suggest that in the year to June 2019 more than 50% of all deals (by number) in private markets infrastructure were in the renewable energy space.  Investors, particularly those looking at the special purpose vehicles established to fund renewable projects such as yieldcos and renewable energy investment trusts, should be paying close attention to the characteristics of assets that are being acquired and the assumptions underpinning the acquisitions. In particular, investors should be paying careful attention to merchant price assumptions, PPA risk allocation and the total project return – not just the short-term cash flow yields.

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