Vitol, the world’s largest independent energy traders and one of the world’s largest oil and gas companies, announced last week the formation of a renewable energy fund with privately-owned investment company Low Carbon starting with an initial allocation of €200 million.
Based in Switzerland, Vitol is not only the largest energy trader in the world and ranked eighth on the Fortune Global 500 list, it is also one of the largest natural gas and oil trading companies — having increased its volume of liquid natural gas (LNG) by 185% to 7.4 million tonnes in 2017, and ranked as the biggest independent oil trader.
However, as with many of its competitors, Vitol has begun to see the importance of renewable energy sources and, last week, it announced the closing of a renewable energy fund, based on the British island of Jersey, which will focus on generating “significant investment” into renewable energy assets across Europe.
The fund, VLC Renewables, will start with an initial allocation of €200 million ($233 million USD) from Vitol and will invest in European renewable energy generation projects, initially targeting all stages of the development cycle for onshore and offshore wind projects.
“By 2025 almost 27% of European electricity will be generated from wind and solar,” said Simon Hale, Investments at Vitol. “As a major participant in Europe’s power markets and as a significant investor in energy infrastructure worldwide, Vitol is keen to build a portfolio of renewable investments to complement its existing activities.”
The VLC Renewables fund will build on Low Carbon’s expertise in renewable energy and Vitol’s lengthy experience in the global energy sector.
“We are very pleased to close this new fund,” explained Roy Bedlow Chief Executive at Low Carbon. “Partnering with Vitol, one of the largest energy companies in the world, will enable us to drive scale in the investment and development of clean energy”.
“At its core, Low Carbon is committed to tackling climate change and reducing carbon emissions through its long-term investments into the green infrastructure space. We firmly believe it is possible to provide all the energy we need through renewable sources, and this fund will help us further our ambition.”
“The market has a good mix of proven low carbon technologies and we are seeing strong deal flow for investments across our target sectors. We look forward to working with Vitol in identifying and closing new green infrastructure investments.”
This move also follows a larger trend being played out by fossil fuel majors around the world to diversify their holdings by investing in and supporting the development of renewable energy. A Vitol spokesperson confirmed this by saying that, “Renewables have an important role to play in the energy mix and we anticipate that their role will increase, particularly if other complementary technologies, such as battery, evolve.”
Vitol and Low Carbon have also already worked together, making this partnership a no-brainer for the two companies, as Quentin Scott, the Marketing Director of Low Carbon, explained to me.
“Low Carbon and Vitol have already built a successful joint track record,” said Scott. “Through VLC Energy, a joint venture between Low Carbon and VPI Immingham (part of the Vitol Group), we successfully invested in and built large-scale battery storage projects at Cleator and Glassenbury in the UK with a combined capacity of 50MW. Vitol is a major participant in Europe’s power market and a significant investor in energy infrastructure worldwide. Low Carbon’s partnership with Vitol will help drive investments into renewable energy projects at scale.”
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