As the world builds up to the COP27 summit in Egypt next month, Canadian and Arabian Gulf state-owned investors have ramped up their commitments to renewable energy.
COP27 is set to cover a range of topics, including climate finance and decarbonization. State-owned investors have announced a slew of investments across markets to shore up renewables. Their investments so far this month are almost on a par with the annual total for 2019, the year before the pandemic. The accelerated investment in renewables indicate that the pandemic accelerated energy transition as long-term investors became more sensitive to climate risks.
In recent days, Abu Dhabi state investor Mubadala acquired a stake in Skyborn Renewables, a German offshore wind developer of Global Infrastructure Partners (GIP). Skyborn has a capacity of more than 7GW with five operating and under-construction projects in Germany, France and Taiwan as well as a 30 GW pipeline of diversified offshore wind projects in various stages of development. As part of the deal, Mubadala will also buy into GIP’s 50% interest in a 1.6 GW Bluepoint Wind project, which is located near the coast of New Jersey and New York. Indications are that the Mubadala acquisition is likely to be well over US$2 billion, although the value and terms have not been disclosed.
Canadian investors, however, are also looking at opportunities in private equity and private credit. This week has seen Alberta Investment Management Corporation agree a C$150 million five-year senior secured second lien credit facility with Canada-based Tidewater Renewables Ltd. AIMCo’s facility will bear initial interest of 6.50% per annum. As part of the AIMCo Facility, Tidewater Renewables issued 3.3 million warrants to AIMCo, which entitle AIMCo to purchase one common share at a price per share of C$14.84, for a term of five years, a 50% premium to the 10-day volume weighted average trading price of the Common Shares prior to closing of the AIMCo Facility.
Another Canadian public pension fund manager, Québec’s CDPQ, also pledged a significant amount of capital for renewables. CDPQ has indicated it will invest US$135 million in the Japanese renewables developer Shizen Energy and the two have agreed a “co-investment framework” that will see the Canadian group put up to US$339 million more behind projects in Japan and overseas. CDPQ has also backed US renewables giant Invenergy and India’s Azure Power among others in the sector. Shizen is involved in development of 1GW of projects spanning wind, solar, small-hydropower and biomass in Asia and Brazil.
Earlier this month, Dutch public pension fund manager APG acquired a 49% stake in the US$1.2 billion Gemini Solar + Storage project outside of Las Vegas to APG. Once complete and operational in 2023, Gemini is expected to generate enough clean energy to power more than 400,000 homes during peak periods and displace 1.5 million metric tons of CO2 annually. Gemini is currently the largest solar + storage project under construction in the US and recently closed a record breaking US$1.9 billion tax equity and debt financing.