Danish pension fund ATP is investing in what is set to be the EU’s largest geothermal plant and will be built in Aarhus by a new subsidiary of Danish shipping group AP Møller.
Innargi, part of AP Møller, signed a 30-year deal today with AffaldVarme Aarhus, the district heating company of Denmark’s second-biggest city, to develop and operate the plant, having raised capital from the DKK927bn (€125bn) pension fund ATP and from Danish utility company NRGi at the end of 2021.
ATP and NRGi own 37% and 20% of Innargi, respectively, while AP Møller Holding holds the rest of the share capital, according to ATP.
Bo Foged, CEO of ATP, said: “While the sun and winds come and go, the heat inside the Earth is always there. This makes geothermal energy stable and renewable, and it is needed if we are to succeed in the green transition.
“ATP is proud to enable this project, which has a huge Danish and international potential, and where there will be returns to be gained in the long run for the benefit of our members.”
Foged said the investment was very suitable for ATP and was in line with the climate ambitions of Denmark’s largest pension fund.
“First and foremost, it offers us an interesting return potential and at the same time, we’re about to reduce CO2 emissions,” he told IPE Real Assets.
The Innargi plant will extract water at a temperature of 60-90 degrees Celsius from 2-3km below the surface, capturing the head at ground level and transferring it to the district heating network.
The plant is set to be the biggest in the EU and will meet up to 20% of Aarhus’ heating demand.
The supply of geothermal heat to Aarhus residents will start in 2025, according to the plan, and the plant is expected to be fully developed in 2030 with capacity of 110MW.
ATP declined to say how much it had invested in the project, or future investment plans.
Foged would not confirm that reports that the plant will require DKK1.5bn of capital expenditure, but he said: “We expect an infrastructure-like return on the investment where we get paid for the development risk that we take.”
He said the project was not being subsidised and would not cost consumers extra. “We’ll be able to do the investment on market terms,” he said.
Samir Abboud, CEO of Innargi, said: “We see a huge potential for geothermal-based heating in many European cities that are struggling to phase out coal to meet the climate targets.”
Abboud cited Denmark, Germany and Poland as countries with the right subsurface conditions to significantly reduce the need for coal, gas and imported biomass.
A previous version of this story incorrectly stated that DKK927bn of capital for the project had been raised from ATP and NRGi, whereas that figure in fact described ATP’s total assets.
