Saudi Arabia's Public Investment Fund (PIF) has joined Abu Dhabi's Mubadala in investing in German offshore wind developer Skyborn Renewables, alongside Global Infrastructure Partners.
Skyborn has developed more than 7GW of capacity and is advancing a pipeline of projects with more than 30GW with a focus on Germany, France and Taiwan, making it the world’s biggest private offshore wind developer.
PIF’s acquisition of a 9.5% stake comes after Mubadala announced it had acquired a stake in Skyborn alongside GIP in October. The investment included the acquisition of a stake in GIP’s 50% interest in Bluepoint Wind, which is a 1.6GW offshore project in the US.
Khaled Abdulla Al Qubaisi, Chief Executive Officer of Real Estate and Infrastructure Investments at Mubadala, said, “Offshore wind is one of the most attractive and fastest growing segments within renewables, with the sector expected to grow 10-fold in the next decade. Wind energy is an important component of the transition to clean, renewable power and as a responsible investor, we at Mubadala are proud to be a part of a consortium that is playing a leading role in addressing the global challenges of the climate crisis and energy security.”
Offshore wind is set to become the fastest-growing renewable energy sectors with current installed capacity of 27GW set to grow to 290GW by the year 2035, requiring US$50 billion per annum in investments.
PIF Deputy Governor and International Investments Division head Turqi A Alnowaiser said: “This investment opportunity enhances our objectives to increase our portfolio of investments in the low carbon sector, which now includes solar, power generation, electric vehicles and offshore wind energy.”
In terms of regions, North America and Northern Europe continue to be the most popular destinations for renewable energy investment by SOIs, thanks to a high level of opportunity and a positive regulatory environment, as well as the efforts of certain countries, such as the UK, around FDI. Europe is now rivalling North America for renewables investment. President Joe Biden has made climate change a key theme of his presidency with greater opportunities in a renewables sector, offering potentially higher rewards in an investment environment where carbon carries a penalty. He pledged to “deliver an equitable clean energy future” and after gaining office he outlined grand ambitions to deploy US$2 trillion of investment to clean up a raft of sectors during his first term in office.
Yet, Europe is competing for capital – and efforts by the EU and the UK are succeeding. Global SWF data shows that SOI investment in renewables in the year-to-date totals US$6.45 billion, an increase of around a third from 2021. As a result, it is the biggest target for SOI capital in the sector, while allocations to North America and Emerging Markets have halved to US$2.2 billion and US$3.2 billion respectively. Developed Asia has almost doubled to US$3.7 billion.
In 2022, there was renewed impetus by the EU to use green energy to ween itself from Russian oil and gas and SWFs and PPFs from across the world have supported the transition. In May 2022, the EU launched plans for a massive increase in solar and wind power with the European Commission stating the bloc needed to find an extra EUR210 billion over the following five years to pay for phasing out Russian fossil fuels and speeding up the switch to green energy.
In mid-2022, Dutch pension fund APG teamed up with its Ontario counterpart OMERS to acquire Groendus, a new leader in the Netherlands’ energy transition, from investment company NPM Capital. Groendus was created in 2021 from the merger of six specialized companies active in, among other things, solar projects, smart metering services and sustainable energy solutions. The producer and supplier has installed 170MW of solar capacity and built more than 300 solar power stations in the Netherlands and has the ambition to significantly expand this number, alongside its push for more sustainability solutions, such as smart charging and battery storage.
The APG-OMERS takeover is typical of the kind of partnerships SOIs forge in renewables infrastructure. Other examples are: Cubico Invest (OTPP, PSP), Arevon Energy (ADIA, APG, CalSTRS) and co-investments such as Greenko Energy (ADIA, GIC) and Generate Capital (AP2, AusSuper, QIC). These will be increasingly popular as the industry becomes hotter and sovereign investors seek to rely on external expertise to catch the green wave.