On Wednesday, Norges Bank Investment Management, the world’s largest sovereign wealth fund and steward of $1.1 trillion in Norwegian state assets derived from the country’s offshore oil reserves, has made its first-ever investment in renewable energy infrastructure. The fund has agreed to pay just over $1.37 billion for a 50 percent stake in a Dutch offshore wind farm, Borssele 1 & 2. The seller is Danish wind turbine giant Ørsted A/S, which will remain co-owner and operator of the project.
“Unlisted renewable energy infrastructure is a new asset class for the fund, which we invest in to improve the overall diversification of the fund,” said Nicolai Tangen, Chief Executive Officer of Norges Bank Investment Management, in an official statement on the investment, adding that the fund “looks forward to continuing to execute on [its] investment strategy” in renewables infrastructure.
“We are excited to have made our first investment in unlisted renewable energy infrastructure and pleased to partner with Ørsted as the market leader in offshore wind,” added Mie Holstad, Norges Bank Investment Management’s Chief Real Assets Officer. “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. The unlisted renewable energy infrastructure strategy supplements our existing unlisted real estate portfolio well, and we draw on our long experience with direct investments.”
Martin Neubert, Chief Commercial Officer and Deputy Group CEO of Ørsted, also commented on the transaction: “As one of the world’s largest institutional investors, Norges Bank Investment Management is making a difference by making sustainable investments. We’re delighted to welcome NBIM as partner on Borssele 1 & 2, which is a landmark project for the Netherlands’ transition to renewable energy, and we’re pleased to support NBIM in their strategy to invest in renewable energy infrastructure assets.”
Borssele 1 & 2, located 23 kilometers off the coast of Zeeland (in the Netherlands) is currently the largest operational offshore wind farm in the Netherlands, and the largest offshore wind farm in the world, with an installed capacity of 752 MW. The farm consists of 94 Siemens Games 8 MW offshore wind turbines, installed at water depths ranging from 14 to 36 meters. The farm generates power equivalent to the annual consumption of 1 million Dutch households. Ørsted noted that the development of Borssele 1 & 2 kickstarted the Netherlands’ ambitious program for offshore wind buildout and will continue to help the country meet its 2030 carbon reduction goals.
The Norwegian oil fund was established in 1990, following the 1969 discovery of significant oil reserves in Norwegian territorial waters in the North Sea. The fund–which invests only abroad, and holds close to 2 percent of all equities traded on the planet–was created to serve as a financial reserve for the Norwegian state, as an economic shield against oil revenue volatility, and as a long-term savings plan for current and future generations of Norwegians. In addition to its extensive holdings in publicly listed companies (it holds positions in some 9,000 firms worldwide), the oil fund also invests directly in global real estate. Nearly 20 percent of Norway’s annual state budget is paid by oil fund revenues.
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