Diving into the details of DORE’s recent performance and strategy, it’s clear that this fund is not just riding the renewable energy wave—it’s trying to steer it. With an annualised return of 8.8% from launch to end December 2024, DORE has not only outperformed its target but also signaled a significant shift in how infrastructure investments are approached.
DORE’s strategy of diversification is a bold move that could redefine the sector. By spreading its investments across various geographies, technologies, revenue streams, and project stages, the fund aims to mitigate the seasonal volatility of revenues and reduce dependency on any single technology. This approach is not just about playing it safe; it’s about creating a resilient portfolio that can weather the storms of regulatory changes, political shifts, and market fluctuations. The fund’s willingness to invest in construction-ready and construction-phase projects, albeit with a risk cap, shows a proactive stance towards shaping the energy landscape rather than merely reacting to it.
The fund’s commitment to climate change mitigation, as evidenced by its SFDR Article 9 label and its hydro SPV’s top ranking in the GRESB sustainability benchmarking, is more than just a nod to environmental concerns. It’s a statement that sustainable investing can be profitable. DORE’s success in generating higher returns through asset optimisation activities challenges the notion that sustainability comes at the cost of profitability.
The involvement of Downing LLP, with its substantial AUM and specialist team, adds a layer of credibility and expertise to DORE’s operations. The successful fundraising rounds, from the initial £122.5m at IPO to the additional £50m in June 2022, demonstrate investor confidence in the fund’s strategy and management.
But how might this news shape development in the sector? Firstly, DORE’s success could encourage other funds to adopt similar diversification strategies, leading to a more robust and varied renewable energy market. Secondly, the fund’s focus on sustainability without compromising on returns could attract more investors to the green energy sector, accelerating the transition to net zero.
Moreover, DORE’s investment in construction-ready projects could stimulate innovation and growth in renewable energy technologies. As more funds follow DORE’s lead, we could see an increase in the development and adoption of new technologies, further driving the energy transition.
However, the sector should also brace for potential challenges. The fund’s strategy relies heavily on the effectiveness of its diversification approach and the success of its asset optimisation activities. If these do not yield the expected results, it could dampen investor enthusiasm for similar strategies. Additionally, the regulatory and political risks, though mitigated, are still present and could impact the fund’s performance.
DORE’s approach is a wake-up call for the sector, pushing investors and funds to think beyond traditional strategies and embrace a more dynamic, diverse, and sustainable approach. As we navigate the complexities of the energy transition, funds like DORE could be the beacons guiding us towards a greener, more resilient future. The coming years will be a testament to whether this bold strategy pays off, shaping the sector for better or worse.
