Norway Pension Fund To Invest In Unlisted Renewables

Government Pension Fund Global To Invest Up To NOK 120 Billion In Unlisted Renewable Energy Infrastructure After Ministry Of Finance Allows Move
05:11 AM (Beijing Time) - 16. April 2019
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GPFG or the oil fund of Norway with a market value of NOK 8,995 billion ($1,058 billion) will seek investment opportunities in unlisted renewables infrastructure market after the Ministry of Finance allowed the move. Pictured is the skyline of Trondheim, Norway. (Photo Credit: Dan Darolti/www.goodfreephotos.com)

Key Takeaways

  • The Ministry of Finance in Norway has allowed its Government Pension Fund Global (GPFG) to invest in unlisted renewable energy infrastructure
  • Upper limit for such investment has been doubled from NOK 60 billion ($7.06 billion) to NOK 120 billion ($14.12 billion).
  • This falls in the economic strategy of the fund and is not part of its investment strategy
  • Norges Bank that manages the fund said it will proceed with caution and start out by considering investments with partners in developed markets and in projects with relatively low operational and market risk

Norway’s Ministry of Finance has allowed its Government Pension Fund Global (GPFG) to invest in unlisted renewable energy infrastructure; the upper limit on such investments will be doubled from NOK 60 billion ($7.06 billion) to NOK 120 billion ($14.12 billion).

While the investments will be made within the scope of special environment-related mandates only, the Minister of Finance, Siv Jensen emphasized that it is not a climate policy measure. Instead, it is part of the investment strategy for the fund.

Norway’s government believes the major part of the renewable energy investment opportunities is found in the unlisted market especially in unlisted infrastructure projects that shows this market is of interest for institutional investors, such as GPFG.

Also known as the Oil Fund, GPFG is managed by Norges Bank on behalf of the Finance ministry. The current market value of the GPFG is NOK 8,995 billion ($1,058 billion).

To start with, Norges Bank said it will proceed with caution and start out by considering investments with partners in developed markets and in projects with relatively low operational and market risk.

After a three-year diligence process the Government Pension Fund Global has confirmed that investments in unlisted renewable energy have a sound cash position, healthy exit strategies and a positive outlook,” said Institute for Energy Economics and Financial Analysis (IEEFA) Finance Director Tom Sanzillo. “This is a growth industry. Investments by the fund now allow it to take advantage of this growth and to use its resources to develop the market for decades. Moreover, Norway will tighten its coal criteria which will lead to the divestment of large mines and coal-exposed power companies. This is a strong step for the health of the Fund and the planet.”

In August 2017, the United States based think tank IEEFA suggested the country could invest NOK 190 billion ($25 billion) to renewable energy portfolio from government pension fund (see Norway Should Allocate More Govt Funds For RE).

IEEFA adds the policy change will be presented for parliamentary vote in Oslo in June 2019 and is expected to be approved.

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani