Investment in renewable energy resources rises by NBIM due to escalating expenses in traditional capital sectors.
In a significant move towards sustainable investing, Norges Bank Investment Management (NBIM) has announced a new capital allocation of €900 million to unlisted renewable energy infrastructure. This investment is part of an agreement with Copenhagen Infrastructure Partners (CIP), a leading Danish asset manager.
The focus of the investment, known as "CI V," is a diverse base of assets including energy storage, offshore wind, onshore wind, and solar. The geographical scope of "CI V" spans across North America, Western Europe, and developed economies in the Asia Pacific region.
Copenhagen Infrastructure Partners' fifth flagship fund, "CI V," reached a first close at €5.6 billion in June 2023. Mie Holstad, Chief Investment Officer Real Assets at NBIM, stated that the agreement will enable them to invest in renewable energy projects in the development stage.
This investment is a valuable addition to the portfolio NBIM is currently building. It provides further investment possibilities and exposure to other parts of the value chain, as well as the opportunity to continue building knowledge and experience with new markets and technologies.
However, the negative return of -17.7% for the first half of 2024 in unlisted renewable energy infrastructure is attributed to the rising cost of capital. This is a challenge that the fund's future projects, expected to generate net income in the future, will also face.
It's important to note that this investment fits into a management mandate received from the Norwegian Ministry of Finance in 2019, which allows asset allocation into unlisted renewable energy infrastructure. In April, NBIM made two investments: a 40% stake in two solar plants in Spain for €203 million and a 37.5% acquisition of an operational offshore wind farm in the UK - Race Bank - for £330 million.
The Government Pension Fund Global's latest half-year report warns of the investment risks in unlisted renewable energy infrastructure. Despite these risks, NBIM's strategic decision to invest in "CI V" underscores its commitment to sustainable and renewable energy investments.
The manager leading the CI V fund management at Copenhagen Infrastructure Partners is Grethe Helene Lunde. Under her leadership, "CI V" is focused on greenfield investments within large-scale renewable energy infrastructure.
In January 2024, NBIM made a €307 million investment in a portfolio of Spanish solar and onshore wind assets. This investment, like the recent allocation to "CI V," underscores NBIM's long-term commitment to renewable energy infrastructure.
