National Grid scheme commits £185m to UK renewables
On the go: The National Grid UK Pension Scheme has awarded a £185m mandate to Octopus Renewables to manage UK solar and onshore wind assets.
The £20bn defined benefit scheme has allocated to the alternatives specialist's Renewable Energy Income Partnership III, which gives Octopus discretion in management over the 25-year mandate period.
The mandate award adds to a steady trend of institutional interest in renewable energy projects in the UK - the Octopus fund is its third partnership with an institutional investor in two years, and the Conservative government has repeatedly considered how to marry up scheme demand for predictable long-term cash flows with the UK's patient capital requirements.
Kilian Thevissen, investment manager for return assets and Pravi Prakash, from the investment management team at NGUKPS said in a statement: “We are pleased to have onboarded Octopus and look forward to working together on this important asset class.”
Alex Brierley, co-head of Octopus Renewables, said: “We are delighted to embark on this long-term partnership with the National Grid UK Pension Scheme. With predictable income, diversification and sustainable investment all at the forefront of institutional investors’ minds, this commitment by NGUKPS shows that our Renewable Energy Income Partnership series continues to provide an attractive solution for investors.”
Interestingly, the allocation to a 25-year fund suggests the NGUKPS' continued commitment to managing its own assets and liabilities towards self-sufficiency, at a time when the scheme has taken advantage of successive insurance derisking opportunities.
The scheme covered the pensions of some Section B members in a £1.6bn buy-in with Legal & General in November 2019, just over a month after insuring the younger portion of its Section A pensioner members with a £2.8bn deal with Rothesay Life.