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Czech Republic-based private equity fund manager EnerCap Capital Partners is planning to launch a second fund to invest in renewable energy projects in Central and Eastern Europe although multiple downgrades of feed-in tariffs and renewable energy certificates across the CEE have taken place.
EnerCap raised €98 million for its first renewable energy fund and will increase its target for its second renewables fund. The second fund, which will have a bigger size, could be launched next year.
EnerCap, which has been the sole private equity firm for renewable energy investment in the CEE region, will capitalise on the reputation it has built in that region for its next fund.
The firm has now fully invested its first renewable energy fund, the EnerCap Power Fund I (EPF I), but so far postponed raising a second fund due to the recent political uncertainty.
EnerCap has high confidence in the Polish market. The firm will, however, likely steer clear of some of its former main markets.
Hungary and Bulgaria both applied retrospective changes to their renewable energy subsidies, while Romania has long said it will reduce its green certificate subsidies.
Although EnerCap financed Romania's first non-recourse power project, the country is unlikely to feature significantly in its second fund due to its fluctuating policies. Debt also remains challenging in Romania due to the scarcity of providers willing to provide sufficient leverage.
EnerCap may hold out on other jurisdictions, including the Czech Republic and Croatia. The Czech Republic recently increased its tax revenue on photovoltaic systems to 10% and while Croatia benefits from a promising incentive structure, EnerCap has not yet built up a significant track record in the country's wind industry.