Renewable energy investments see a boost from NBIM due to escalating capital expenses
In a significant move towards sustainable energy, Norges Bank Investment Management (NBIM) has announced a new capital allocation of €900 million to unlisted renewable energy infrastructure. This investment will be made through an agreement with Copenhagen Infrastructure Partners (CIP), a Danish asset manager.
The focus of the investment, named "CI V," is on a diverse base of assets such as energy storage, offshore wind, onshore wind, and solar. The geographical scope of "CI V" includes North America, Western Europe, and the Asia Pacific region.
Mie Holstad, Chief Investment Officer Real Assets at NBIM, stated that the new agreement will provide further investment possibilities and exposure to other parts of the value chain. She added that this investment is a valuable addition to the portfolio NBIM is currently building and will provide the opportunity to continue building knowledge and experience with new markets and technologies.
In April, the fund invested €203 million in a 40% stake in two solar plants in Spain. Also in the same month, the fund acquired a 37.5% stake in an operational offshore wind farm in the UK - Race Bank - for £330 million. The negative return for the first half of 2024, for the fund's investments in unlisted renewable energy infrastructure, was attributed to the rising cost of capital.
According to CIP, "CI V" is focused on greenfield investments within large-scale renewable energy infrastructure. The fund has invested in a project under construction and committed capital for future projects. These future projects are expected to generate net income in the future, but their income will also be negatively affected by the current higher cost of capital.
In January 2024, the Norway sovereign wealth fund made an additional €307 million investment into a portfolio of Spanish solar and onshore wind assets. This investment is an indirect investment into CIP's fifth flagship fund, "CI V." As of June 2023, "CI V" has reached a first close at €5.6 billion.
The agreement fits into a management mandate received by NBIM from the Norwegian Ministry of Finance in 2019, which allows asset allocation into unlisted renewable energy infrastructure. This move is part of NBIM's commitment to sustainable and long-term investments in renewable energy.
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