NBIM’s acquisition of a 50% stake in the Borssele 1 and 2 wind farm off the Netherlands for US$1.63 billion is the firing shot for the Norwegian sovereign fund Goliath's plans to devote 2% of its AUM to renewable energy. Borssele is the world’s second-largest offshore wind farm in operation, with an installed capacity of 752MW.
The decision to back the windfarm came as NBIM announced a revised strategy in which the renewable energy portfolio will gradually be grown, with investments primarily in wind and solar power. NBIM is targeting NOK120bn (USD14.2bn) investment over the next couple of years. This indicates that Borssele is just the tip of the iceberg for the fund.
NBIM is looking seriously at offshore wind in Europe, which it forecasts will rise four-fold to 102GW by 2030, and it is planning on making chunky investments.
In its strategic plan, NBIM is targeting a real estate portfolio of up to 5% of AUM, made up of listed and unlisted assets managed under a combined strategy. The fund’s real assets portfolio forms a small part of its overall assets under management, but the sheer scale of the fund and its ethical commitment means it will influence trends.
Climate change risks will inform its entire portfolio management, according to the fund. Responsible management will include holding boards accountable for outcomes of their decisions. At the same time, NBIM will reduce expose to companies with unsustainable business models.
NBIM is regarded as a trend-leader among SWFs. For instance, it was the first to put Japan’s Kirin Holdings on a watch list for possible exclusion for the beverage giant’s business ties to Myanmar’s military following a coup d’etat. It was followed others such as Dutch pension fund manager APG which pushed for POSCO to withdraw from the country.
While NBIM’s weight will certainly boost efforts to develop green energy generation, among SOIs it is not a trailblazer but rather a latecomer in the stage of renewables investment compared to Mubadala’s Masdar, which has been pressing ahead with the Abu Dhabi fund’s investment in renewables. This week it signed agreements to develop a utility-scale solar photovoltaic project in Azerbaijan with 230MW by 2023 as part of its overall push into renewables.
Masdar has active investments in over 30 countries and nearly US$20 billion deployed in global projects, including wind and solar. The clean energy investor focused on Ukraine and Central Asia in February where it hopes to strike in-roads into markets where renewable energy is a small but fast-growing part of their energy mix.