Invest in a clean and just energy transition

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Henry Bacon, Head of finance, operations and investor relations, Snowball

Thu 15 February 2024

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The latest COP summit was held in the UAE in December 2023. The stakes were very high with the UN Environmental Programme warning beforehand about the increasingly urgent need for drastic actions to reduce carbon emissions and avoid global temperatures rising to unsustainable levels. This followed an earlier IPCC report, published by leading climate scientists, warning that the planet was expected to overshoot 1.5°C by the 2030s.

The summit ran far from smoothly, which was not helped by the record number of lobbyists representing the fossil fuel industry or the economy of the host nation being heavily reliant on the production of hydrocarbons. Ultimately, the agreement reached by the 200 participating countries to boost the production of renewable energy such as wind and solar and transition away from fossil fuels in a “just, orderly and equitable manner” offered some encouragement, but the lack of specific timelines or commitments for a complete phase out of fossil fuels was equally concerning.

At Snowball, we are acutely aware of the pressing need to achieve a just transition to safeguard the well-being of future generations. In simple terms, the energy transition requires the electrification of (almost) everything (e.g. cars, heating, factories) alongside the decarbonisation of the electricity supply by scaling up wind and solar in particular. Below are some examples from the portfolio focused on clean energy transition. We also invest to solve some of the resulting challenges around intermittency, grid balancing and transmission. At the same time, in our investments we focus on the local communities that stand to lose most from a shift away from fossil fuels.

The Snowball fund is explicitly not invested in the extraction, production or distribution of fossil fuels. Supporting the transition to a clean energy future has always been a core pillar of our investment strategy. It is one of our six impact themes, representing 22% of the total portfolio.

Sharing the sunshine

A solar bond gave people and organisations from the local and wider community the opportunity to invest in Burnham and Weston Energy CIC, and have a say in how they are run. In addition to investing in bond issuances of companies and projects like this, Snowball also invests in Thrive Renewables and Coigach Community who not only support the energy transition by providing clean power to homes but also invest in their local communities.

AI powered forecasts

A new holding in the Snowball portfolio, Dexter Energy, was started with the idea of using machine learning to accelerate the transition toward a fully renewable power system. They use AI-powered forecasting to optimise the short-term trading of power. Their products are being used by some of the most innovative energy companies in Europe.

Wind energy

GEV Wind Power is the market leader in the UK and US for the maintenance of wind turbine rotor blades. The company ensures that the turbines continue to produce clean energy as efficiently as possible. In 2023 GEV Wind Power worked across 5 continents on more than 200 individual wind projects.

Powering the future

Capital Dynamics Fund VIII and IX are focused on building and operating solar and wind projects in the UK and mainland Europe. The portfolio includes Fenix Renovable, a 133MW solar photovoltaic plant in Iberia and is one of the largest utility-scale solar PV facilities in Spain. The subsidy-free project, located in the Cadiz province in Southern Spain, has a long-term power offtake agreement.