Norway’s sovereign wealth fund has made its second direct renewable infrastructure investment, buying nearly half of a solar and onshore wind power portfolio in a new joint venture with Spain’s Iberdrola for €600m.

The manager of the NOK13.2trn (€1.23tn) Norwegian Government Pension Fund Global (GPFG) said in a statement: “Norges Bank Investment Management [NBIM] has signed an agreement to acquire a 49% interest in a 1.3GW portfolio of solar plants and onshore wind farms located in Spain.”

Iberdrola was the seller and would remain as co-owner and operator of the portfolio, which comprised seven solar plant projects and five onshore wind projects, NBIM said. Solar plants made up 80% of the portfolio with onshore wind accounting for the remaining 20%, it said.

The Oslo-based central bank division said it would pay €600m for its stake in the assets, valuing the portfolio at around €1.2bn, and that no external debt financing would be involved in the transaction.

Altogether, the projects involved have an installed capacity of 1265MW, NBIM said, which equated to the annual electricity consumption of 700,000 Spanish households.

Nine projects are under development, and expected to be completed in 2023-25, said NBIM. It said it would take ownership of them when operational.

NBIM is one of Iberdrola’s main shareholders having held more than 3% of the Bilbao-based multinational for more than seven years, and the Spanish firm said the new partnership built on a longstanding relationship.

“The alliance between Iberdrola and Norges Bank Investment Management joins two preferred partners in a relationship that could be extended to additional renewable energy opportunities in further markets,” Iberdrola said in a statement.

The investment marks a key step for NBIM, as it is only the second unlisted renewable infrastructure investment it has made, despite having received the go-ahead for the asset class nearly four years ago.

The asset will stand alongside the GPFG’s first foray into the asset class – the 50% stake in a Dutch offshore wind farm it bought in April 2021 for €1.37bn.

In April 2019, the Norwegian government allowed the GPFG to invest up to 2% of its value in unlisted renewable energy infrastructure. Up to then, its portfolio had included only three asset classes – listed equities and fixed income, and unlisted real estate – although this was limited to a maximum of NOK120bn because the investments had to be made within the GPFG’s special environment-related mandates.

Since then, scope for the GPFG to invest in such assets has more than doubled as the Norwegian government removed a restriction in its mandate in April 2021 that prevented full use of the 2% allocation.

Last September, Tangen told journalists that NBIM was continuously working on building its renewable infrastructure portfolio, but that suitable assets were hard to come by.

“We are in several processes, but these are difficult to get and there is very, very strong competition with correspondingly challenging returns. We are on the case,” he said at the time.

The value of the Dutch investment has declined since it was made, though. At the end of the first half of 2022, NBIM’s renewable energy infrastructure assets had a market value of NOK13bn, according to the SWF manager.

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