Norway’s sovereign wealth fund has made its first direct infrastructure deal, investing €1.37bn in a Dutch wind farm, in line with Norges Bank Investment Management’s (NBIM) long-held ambitions to add the asset class.
NBIM, the manager of Norway’s NOK11trn (€1.1trn) Government Pension Fund Global (GPFG), said it has agreed to buy half of the Borssele 1 & 2 offshore wind farm from Denmark’s Ørsted.
No external debt financing will be involved in the transaction, the manager said. Ørsted is to remain co-owner and operator of the project.
Nicolai Tangen, CEO of NBIM, told a press conference in Oslo: “We are really proud to announce that we have bought 50% of the second largest operational windmill farm in the world.
“Borsele 1 & 2 generates the equivalent amount of energy that is used to fuel one million Dutch households, so it’s very significant,” he said.
Borssele 1 & 2, which was fully commissioned in the fourth quarter of 2020, is located 23km off the coast of the Dutch region of Zeeland, at water depths of between 14 to 36 meters, according to NBIM.
The facility consists of 94 Siemens Gamesa 8MW offshore wind turbines.
Mie Holstad, NBIM’s chief real assets officer, said: “Borssele 1 & 2 is a high-quality offshore wind asset, and the acquisition is in line with our strategy to build a high-quality portfolio of wind and solar power generation assets.”
While NBIM’s mandate from the Norwegian Ministry of Finance sets an upper limit for investments in unlisted renewable energy infrastructure of 2% of the fund’s value, they are also to be made within the limit of NOK120bn set for the fund’s environmental investment mandates, according to NBIM’s 2020 report.
NBIM said it built up a group dedicated to investing in unlisted renewable energy infrastructure in 2020, and worked on assessing investment opportunities.
It said in the report that it was concentrating mainly on wind and solar projects in Europe and North America with experienced partners and low power price risks.
Holstad told IPE Real Assets this morning that while NBIM had looked at eight different renewable infrastructure investment opportunities during 2020, it had decided not to proceed with some of them “because of pricing and some were because of things we found out when we did the due diligence”.
She said: “With this type of investment, everything needs to be right and according to the strategy.”
Asked about current opportunities being considered, Holstad said: “In the pipeline today we are looking at different things, and it also depends on the due-diligence phase and what we come up with there.”
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