Norway sovereign wealth fund eyes renewables investments after debut deal

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The Borselle offshore wind farm (pictured) is NBIM’s first direct investment in renewable energy infrastructure. Image: Orsted.

Norway’s sovereign wealth fund is eyeing potential investments in solar generation assets after making its first foray into renewables infrastructure.

Earlier today the fund, which has a worth upwards of US$1.3 trillion, confirmed its first direct investment in renewable energy, taking a 50% stake in Orsted’s Borssele wind farm for US$1.63 billion.

Mie Holstad, chief real assets officer at Norges Bank Investment Management (NBIM), the fund’s manager, said the deal was in line with its strategy to “build a high-quality portfolio of wind and solar power generation assets”.

“The unlisted renewable energy infrastructure strategy supplements our existing unlisted real estate portfolio well, and we draw on our long experience with direct investment,” Holstad said.

NBIM chief executive officer Nicolai Tangen added that investments in infrastructure assets would help diversify the fund’s investment base, noting that the firm was looking forward to executing on further deals.

Norway’s sovereign wealth fund operates under a mandate that stipulates around 30% of its investments to be of a fixed-income nature, while the remaining 70% is allocated towards equity markets, featuring shares in a large number of companies worldwide.

While the majority of its energy-related equity investments outside of oil and gas are in public utilities, it does hold interests in a number of solar companies or entities with solar interests, including the likes of Xinyi Energy, GCL New Energy, Neoen, Sunrun, Array Technologies and Soltec.

A strategy update for the 2021/22 financial year, also published today, states the fund’s aim to “gradually build up” its renewable energy portfolio, focusing primarily on wind and solar projects. Of particular interest are those with reduced power price risk, those with stable cash flow and those with limited investment risk.

Furthermore, the strategy also states NBIM’s aim to invest “alongside high-quality partners with proven operational experience.”

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