Member Q&A: Ivo Arnús, New Sparta A.M.

In the latest of our member Q&A series, Frances Salter caught up with Ivo Arnús, investment director at New Sparta Asset Management.

Ivo Arnús joined New Sparta Asset Management in 2017 as investment director in the global renewable energy strategies team. He began his career in the cleantech sector in 2010 by advising several cleantech private equity funds in the City of London, including Climate Change Capital and Greencoat Capital.

Soon after, Ivo joined RWE Innogy’s portfolio company Quietrevolution as project development director, where he established and ran the development team and its operations. In 2013, Ivo moved to Norvento Enerxia, a successful Spanish developer, operator and technology manufacturer, as director of business development where he stayed until joining NSAM.

Ivo is a seasoned deal originator and closer, having completed over 25 renewable energy projects with Norvento alone. Throughout these years in the industry, Ivo has acquired expertise in the areas of project development and operations of renewable energy plants in several countries.

In the simplest terms, what does your company do?

We are an asset manager with a focus on real assets, including real estate and renewable energy.

Of the deals you’ve worked on, which has been your favourite and why?

As we’re a new outfit, we are yet to complete our first deal and are really looking forward to it. We can see that this will happen very soon.

In the past I’ve worked for other firms and enjoyed closing various deals – for instance all the distributed wind projects I did in the UK were very enjoyable. I got to travel all around the country and even learned about (British) farming culture, I really enjoyed the whole process of it. Going from a green field all the way to the final product up and running, overseeing all the stages of a wind farm development is really rewarding.

In which markets do you see the best opportunities right now? You seem to be doing a lot in Africa.

Correct. We are an emerging markets outfit, so we do have a bias towards covering emerging or high-growth markets. That’s why we are raising a dedicated private equity fund for renewable energy investments in Africa. We see potential for the wind sector there.

I’m Spanish and so I have a bias towards South America – it’s also got a lot of potential as a renewables market and has been very active in recent years. And as soon as we staff our platform a bit more, we look forward to following the South East Asian market closely as we see that growing in importance.

In terms of established markets, we see opportunities in secondary markets within them: particularly assets which have been left because of changes in regulation, or developers who are willing to recycle some of their capital and sell off some of their developments to use that money to develop new sites. We could invest in them.

What do you think is the biggest challenge facing wind power and how would you fix it?

The move from government supported schemes to an unsubsidised model, one including certain degree of merchant risk. This will be the real breakthrough moment. As the industry matures, the focus shifts from upstream (i.e. technology) to downstream (off-taker).

I come from a technology and development background and it makes me proud to see how much we have achieved as an industry. This change in focus is the next logical step forward and the only way the industry will become mainstream and outdo fossil fuels. That said, it’s certainly easier said than done. The challenge lies in convincing our investors (and senior lenders) of such change and convincing the industry to adapt to this new risk profile.

The other short to medium term risk is macroeconomic. I believe increasing interest rates and inflation may also be a challenge as it trickles down to the cost of financing and the OPEX [operational expenditure].

Which trends will affect the wind sector most in the next five to ten years?

That’s the million-dollar question. Change is very much driven by technology so, from a technical perspective, I very much believe that all these advances in data analytics, AI [advanced intelligence] and machine learning should help us more accurately predict wind productions and also consumption patterns (the “load curves”). Such advances should facilitate the move to a merchant model, with corporate PPAs as potentially the longer-term contracted cashflow alternative.

More on technology, I hope to see some improvements in the efficiencies and costs of direct-drive permanent magnet generators - the newer generation of generators - and also in the use of new materials that will make blades lighter, stiffer and stronger so that rotor sizes can continue to increase.

What are the most important lessons you’ve learned during your career?

To be patient. Especially developing infrastructure projects, the process is always slow and takes longer than you thought it would, and it’s always more challenging than you envisioned. But in the end, it’s always really rewarding. To go from a green field to a wind farm takes a lot of sweat and tears.

Additionally, I’ve learned not to take any technology for granted and to really scrutinise the fundamentals: there are differences between manufacturers and that’s important to understand.

Did you have a mentor and if so what did they teach you?

Well, I’ve had various mentors: I appreciate them all as they’ve taught me different things. To remain humble and keep a low profile is probably the best lesson they’ve taught me.

Why did you join A Word About Wind?

I’ve known Adam and the guys from Tamarindo Communications for a while. We were first acquainted five years ago and I’ve been a member ever since, having used Tamarindo as my PR company in the previous company I directed.

Since then, I’ve found A Word About Wind very useful, quick and easy: at the end of the day you have things to do at work and you want those quick snippets of information that are relevant.