Copenhagen Infrastructure Partners (CIP) is now fundraising for what it says is the “world’s largest green energy fund”, a scheme meant to pour billions into renewables across developed economies.
On Tuesday, the Danish fund manager said it is gathering commitments for a vehicle – Copenhagen Infrastructure IV (CI IV) – targeting global plays in contracted offshore wind, onshore wind, solar PV, transmission infrastructure, storage, waste-to-energy and biomass.
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As of 15 June 2020, the fourth fund of the CI series has already raised €1.5 billion (US$1.7 billion) from a pool of institutional investors, including pension plans from Denmark (PensionDanmark and AP Pension) and Norway (KLP).
Fundraising for CI IV will now continue towards a €5-7 billion goalpost (US$5.6-7.9 billion), with talks ongoing with potential contributors in Europe, America, Asia, Australia and Israel. Together with CIP’s own commitments, the fund's final pot could reach €10-14 billion (US$11-15.8 billion).
Approached by PV Tech, CIP had not spelled out by the time this article was published – how much of the €10-14 billion total might be earmarked for solar projects. In its prepared statement, the Danish group explained CI IV will generally focus on greenfield renewable developments.
The green energy fund will target what CIP described as “low risk” OECD states in Western Europe, North America, Australia and developed Asian countries. Together with earlier funds, CI IV will sponsor enough renewables to power 5-6 million homes worldwide, according to the firm.
‘Favourable’ timing to launch largest green energy fund
CIP’s pledge to devote €10-14 billion to the global energy transition emerges as the renewables industry contends with disruption from COVID-19.
The sector, gearing up pre-pandemic for a strong 2020, has had to grapple instead with a reality of supply chain bottlenecks, construction freezes and financing setbacks. The current talk is of a short-term hit from the wider economic recession, followed by a rebound in late 2020 and beyond.
According to CIP managing partner Jakob Baruël Poulsen, the present timing is “favourable” for funds targeting greenfield renewables. He underscored the “significant visibility” of CI IV’s current investment pipeline, as well as its “high degree of execution certainty”.
Bo Normann Rasmussen, CEO of AP Pension, hailed the pension fund’s chance to contribute €335 million (US$379 million) towards CI IV. “We are proud to be part of the world’s largest renewable energy infrastructure fund,” he remarked.
The ramping up of private capital for renewables comes as bodies including the UN and the International Energy Agency (IEA) urge governments to follow suit, amid calls to support green energy even as the COVID-19 emergency squeezes public budgets.
In parallel, research has sought to make an economic case of renewables as a recovery pillar. Studies have documented the slump over the past decade of technology costs, particularly solar’s, and the potential of renewable portfolios to produce higher investment returns.