Greenfield vs brownfield

As the renewables sector looks to emerge from Covid-19, both greenfield and brownfield opportunities are appearing. The formerly ‘new’ asset class has matured, offering investors options in projects at various stages and with different advantages including:

  • Value creation – Brownfield allows for upfront yield whereas Greenfield means a longer term investment
  • Risk vs reward – Greenfield is often developing in new areas of technology and therefore carries a higher risk than Brownfield which is predominantly dealing with the conversion of traditional energy sources into renewable
  • Yield – Whilst Greenfield carries more risk it does yield larger value, having the benefit of being an initial investor. Brownfield conversely, returns a lower yield as the investment is developing an already existing asset

The diversified nature of the market offers ‘something for everyone’ and Japanese investors are no exception to looking to take advantage of the opportunities.

Buyers, sellers and perceptions

So why is this appealing to Japanese investors? There are some distinct characteristics that lend themselves to the types of projects now available.

They can be categorised into two distinct groups:

  1. The first operate in a similar way to IPP investors; they are actively involved in the asset and are often committed for long term. These investors will be active, from a Greenfield perspective, in project finance and there are some key Japanese banks already operating in this space
  2. On the other side are the more passive, cautious investors who are predominantly, financial investors. These are considered to be follower or learning investors and there is a tendency therefore for investment into Brownfield projects

Both groups are important to the European market. Historically a smaller group of investors have been interested in renewables, however the enthusiasm for equity, M&A and, in particular, Brownfield project finance is expanding. The perception of these investors is one of security, and in a world where there is increasing scrutiny on foreign investment, Japanese investors benefit from this reputation – and so to do European infrastructure projects.

Where is the activity?

However, the projects that could be of interest to the Japanese investment community are not limited to the renewables space. Telecoms, regulated assets and storage meters have seen continued appetite, with potential to increase post-pandemic. Drivers for this are:

  • The pandemic has revealed a need to build smarter, more resilient infrastructure that bring together data and digital technology that helps monitor and manage public networks [2]
  • There has been a focus on essential services that has allowed areas like utility assets to continue to operate as usual [3]

This continued activity is, in part, due to the perceived de-stabilising of other sectors [4], encouraging investors towards more future-proofed opportunities. This is bolstered by government investment across the EU in future-focused and green initiatives, coupled with increasingly favourable regulations in the sector.

Second-tier markets, such as Turkey and Serbia, present a certain degree of risk and may therefore not be considered as viable locations for investments as other markets. In markets where the degree of risk is lower however, like France or the Netherlands, investor interest is even stronger than in the pre-Covid landscape .

Emerging innovations and beyond

As we start to look at the market post Covid-19 and beyond, there is a renewed focus from the EU on clean energy in its broadest sense. The EU has committed to this with its Next Generation EU initiative, in which €40 billion is committed to "climate neutrality" [5]. Whereas historically, renewable energy in the EU has been about replacing traditional energy sources, innovative alternatives are continuing to appear, such as:

  • The electrification of sectors not previously using it as their source of power, such as transportation, is a key part of this development. This focus will open up new opportunities beyond the traditional wind and solar power
  • The development of blue and green hydrogen could bring about the next wave of opportunities in infrastructure and renewable development. Large scale projects of this nature are already underway, in the Netherlands where Smart Delta Resources are developing an electrolysis plant to develop energy for large-scale industrial application [6]
  • The EU's recently announced hydrogen strategy [7] is expected to further mobilise investment by bringing together governments, investors and corporations to deliver the target of installation of at least 40 GW of “green” hydrogen by 2030. This type of development has the potential to become a standard asset type in the future

The outlook for the European renewables market remains strong, despite the uncertain conditions Covid-19 has created. With sustained activity in the renewables industry, continued development across different technologies, and a reinvigorated interest in clean energy from governments, it is an exciting time offering a diverse range of opportunities and investors would be well advised remain abreast of the developing trends in order to capitalise on opportunities.

Click here for important information regarding insights and publications >


[1] ‘We won’t slow down’ on climate: EU reacts to COP26 postponement: Frederic Simon,, 04.04.20
[2] Infrastructure investment to be a key driver of growth in emerging markets post COVID-19 crisis, sigma says: Swiss RE, 17.06.20
[3] Pandemic and the future of Infrastructure as an asset class: KPMG, May 2020:  
[4] Preparing for a prolonged period of uncertainty in investment markets: Willson Towers Watson, 24.03.20 
[5] Europe's moment: Repair and prepare for the next generation: European Commission, 27.05.20 

[6] Start of initiative for construction of 1 GW electrolysis plant for green hydrogen in Zeeland: SDR Platform, 01.05.20

[7] The time is right to power up hydrogen: The Editorial board, The Financial Times, 13.07.20