Enter the Norwegian Billion Project – E24

Institutional investors play an important role in green change.

At a time when interest rates are low and there is little to be gained by investing in secure bonds, they have entered the renewable industry, where they make better profits. A number of Norwegian wind projects have been built with funds from Norwegian and foreign pension funds.

Last year, KLP promised to invest up to NOK 6 billion in renewable energy each year. The plan is to operate with electricity, hydroelectric and wind networks.

KLP now takes a 49 percent stake in a Norwegian wind project at around NOK 2 billion, along with Akershus Energi. The project is located in Nord-Odal, on the border between inland and Viken County, just east of Minnesund and Mjøsa.

The Songkjølen and Engerfjellet wind farm will have a total of 34 turbines and will be 160 megawatts, and will be completed in 2021. It will supply around 0.5 terawatt hours (TWh) of electricity per year. Norway’s total production is around 145 TWh.

“Akershus Energi is a solid and serious energy company and we are pleased to be able to increase our investments in renewable energy, thereby helping to secure pensions for the future,” says Harald Koch-Hagen, director of strategic asset allocation at KLP.

Focused on Swedish wind power

Last month, KLP announced that it will invest up to € 50 million (NOK 550 million) in the Skaftåsen wind project in Härjedalen, Sweden, a 231 megawatt, 35 wind turbine project.

– This is a renewable project that well meets sustainable and financial goals for us at KLP. We hope that the project will provide KLP pensioners with a good, stable and long-term performance, Koch-Hagen said.

The owners of the Swedish project also include Polhem Infra, owned by three Swedish state pension funds, as well as the pension fund of the industrial group BAE Systems and the financial companies Arcano and Foresight Energy Infrastructure Partners.

In 2018, KLP also became the 30 percent owner of Stena Renewable AB, a Swedish wind energy developer. The objective was to develop the company together with the other owners, Stena Adactum and AMF Pensionsförsäkring.

KLP and Scatec Solar are also developing solar power plants in Egypt.

Restriction removed

Previously, it was impossible for insurance and pension providers to own larger shares in other types of businesses. But last year, the 15 percent investment restriction on the so-called “insurance-driven business” was lifted.

– After the restriction was lifted, our ability to expand investments in hydropower plants that need improvement has increased, so this is very important to us, said KLP CEO Sverre Thornes to E24 last year.

In February of this year, KLP and DNB entered into a collaboration to invest around NOK 12 billion a year in total renewable energy, such as hydropower and solar energy. Of this, KLP agrees to invest half the amount, in line with the company’s previous goals.

DNB had previously pledged to help secure funding of NOK 450 billion for green projects in the period up to 2025.

Focused on infrastructure funds

Last year, KLP also raised $ 100 million, which is equivalent to about NOK 870 million, in the Copenhagen Infrastructure Partners (CIP) New Infrastructure Fund I.

This renewable infrastructure fund was around $ 700 million.

“This fund offers a good opportunity to increase investment in renewable infrastructure, mainly in fast growing economies in Asia and Latin America,” said Koch-Hagen last year.