At the EFG Hermes 10th Annual London Investor Conference, Economy Middle East speaks to Karim Moussa, co-CEO of EFG Hermes, an EFG Holding company, and CEO of Vortex Energy about the company’s vision in the renewable energy sector. Vortex has been a significant player in this space since its inception in 2014, having invested 1.6 billion euros in wind and solar projects across Europe. In this interview, we discuss how Vortex prioritizes its goals in a rapidly evolving market, with a focus on the company’s latest projects and initiatives.
Tell us about your long-term vision for Vortex and how you prioritize goals. Also please tell us more about upcoming projects or initiatives, as well as some of the biggest challenges facing the renewable energy industry today.
We’ve been investing in the renewable energy space for the last 10 years. We started Vortex Energy in 2014 and until today we’ve invested 1.6 billion euros in equity and debt. There are almost 800 million euros in equity and aggregate wind and solar assets across Portugal, Spain, Belgium, France and the U.K.
We’re now in our fourth vintage fund which has two companies in the portfolio. One is IGNIS, one of the largest renewable energy developers in Spain, Europe, and the world. The second company is called EO Charging which is an electrical vehicle charging business that’s focused on fleets and buses in the U.K.
The industry has changed and is evolving into a completely different environment. Earlier, we were investing in feed-in tariffs and subsidy-linked offtakes with significant incentives from the governments.
Now, these incentives are gone and the industry has widened. It’s more of a developer market that includes batteries, electrical vehicle charging, and hydrogen. In addition, there’s a huge wave from data centers and demand requiring gigawatts of renewable energy capacities.
Therefore, I think the challenge is to change with the industry and not stick to previous models of IPP and development activities. Instead, we need to move into energy management, energy efficiency, and fully-fledged, integrated models that cater to the new wave of demand. This new wave of demand is fueled by new areas like data centers.
Can you specify particular emerging technologies or trends that will significantly impact your business?
It’s now all about getting into an environment of net zero. Battery storage, helping to balance the volatility of the market, wind and solar, and hydrogen are new emerging areas. Green ammonia is another area that is still not economically viable without a lot of incentives.
The industry is going to change, however, it’s now all about decentralized consumption, battery storage, and looking at a solution where all of the production can come from renewable energy resources.
Read: Vortex Energy and EFG Hermes’ vision for renewable energy and education
Are there any particular strategies you are using to expand your market and stand out amid the competition?
We’re financial investors. What we look for is the visibility of cash flows on returns. When we started investing, the visibility of these cash flows on returns came from these incentive programs and feed-in tariffs. As mentioned, that has gone so we are now looking for more long-term PPAs and offtakes instead of taking full merchant risk.
With new technologies and areas emerging, we are now looking at business models that include powering data centers. At the end of the day, it’s about finding the right land and the right interconnection. Then, we can connect solar energy directly to data centers and enter into a long-term PPA with an off-taker like a data center.
Therefore, we’re mimicking the same strategy of finding someone or some venue of offtake that can give us some visibility on cash flow. This way, we can get our investors to commit to this asset class.
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