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Revov Battery Storage

The world’s largest asset manager has a new multibillion-dollar renewable energy fund in the works, and a good chunk of it may go to batteries.

Long a major global investor in wind and solar energy, BlackRock has more recently begun buying into energy storage projects — including its acquisition last year of GE’s distributed solar and storage business.

Looking out over the next few years, energy storage is one market “where we’ll see the opportunity set expand,” said Martin Torres, managing director and head of the Americas at BlackRock’s renewables group.

A transformed investment landscape

BlackRock shook the financial universe this month when CEO Larry Fink said the company will put sustainability at the “center” of its investment approach.

Exactly what Fink’s announcement will mean for BlackRock’s fossil fuel investments remains to be seen. But in the realm of renewables, at least, BlackRock’s green bona fides need little burnishing.

BlackRock launched its first equity fund targeting renewables in 2011; since then it’s played a major role in convincing institutional investors — think pension plans, insurance companies and endowments — to look at wind and solar like they would any other infrastructure asset: boring, safe, predictably lucrative.

Since 2011, BlackRock claims to have channeled $5.5 billion into more than 250 wind and solar projects around the world, a fleet that generates enough power to keep the lights on in Spain. And its appetite for renewables investment keeps growing.

BlackRock’s first renewables private-equity fund drew around $600 million of commitments from big investors. The second, launched a few years later, brought in $1.65 billion.

With its third “vintage,” known as the Global Renewable Power III fund (GRP III), BlackRock is targeting $2.5 billion of commitments; in December it announced a record $1 billion “first close,” meaning the fund can begin making investments even as it continues to bring in more capital.

The difference between how the investing world looked at renewable energy a decade ago and the view it takes today is striking.

In 2011, BlackRock was the only big asset manager offering a renewables-only equity fund. The idea was to offer clients a “niche strategy” in what was then commonly referred to as “alternative energy.” And it wasn’t an easy sell.

“People had these negative storylines in their head,” Torres said, noting Solyndra’s high-profile bankruptcy in 2011. “We really had to focus on the underlying economics of the projects and analogizing to regular infrastructure.”

Nearly a decade later, the landscape is almost unrecognizably altered. 

Today, “you can’t have a conversation around investing in infrastructure without talking about renewables,” Torres said. “It’s now the single largest area of private-market investable opportunities for infrastructure globally.”