UK pension funds and insurers are set for a significant push into renewable energy, with 95% planning to grow their investments over the next five years, according to a survey.

The research, commissioned by AlphaReal, showed that 35% of the respondents that collectively oversee over £350bn (€409bn) in assets will increase renewable energy investments by up to 10%; 44% of respondents say they will raise allocations by between 10% and 20%, while 16% will boost by more than 20%.

Only 5% of the respondents intended to maintain or decrease allocations.

Echoing the surge in demand for renewable energy, the respondents expect more investment opportunities. A third expects a significant increase, while 63% see a slight increase, and just 4% believe opportunities will remain stagnant.

reLooking at the current levels of pricing and valuations for UK renewable assets, respondents believe they are attractive. More than two-fifths or 42% see valuations as “very attractive”, 49% of the respondents see valuations as “quite attractive” and 9% say they are “reasonable”.

Ed Palmer, CIO and head of sustainability at AlphaReal, said: “Renewable energy is an important component in any sustainable investment strategy, offering long-term return potential while aligning with ESG objectives and playing a crucial role in the green transition.

“A greater range of investment opportunities in this sector will ensure pension funds and insurers are able to allocate to renewable energy both now and in the future.”

Boris Mikhailov, head of client solutions at AlphaReal said: “It is not surprising that investors are looking at a wider range of investment opportunities.

“For example, battery storage is getting more traction in the UK as it could be a powerful return enhancer and diversifier of portfolios when combined with well-established and tested technologies such as onshore wind and solar.”

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