Giant Swedish and Scottish pension funds invest £-millions in Britain’s biggest renewable energy fund

Offshore wind farmSweden’s trade union organisation and the biggest local government workers’ pension scheme in Scotland have both invested major sums in the UK Green Investment Bank’s renewable energy fund.

And today (13 Oct) the Edinburgh-registered bank has announced that it has executed a Second Close on new commitments of £355 million for its Offshore Wind Fund.

This brings total committed capital to £818 million and on track towards its £1 billion target – thereby making the GIB-managed fund the largest renewable energy fund in the UK.

Second close investors include Swedish life insurance and pension company AMF Pensionsförsäkring and Strathclyde Pension Fund – which has pumped some £50 million in. The fund represents their first investments in the UK offshore wind sector.

Second close investors join UK-based pension funds, a major sovereign wealth fund and UK Green Investment Bank plc (GIB) in the partnership, which held an initial close on £463 million earlier this year.

The fund is the first to be dedicated solely to investments in offshore wind power generation globally and provides long-term institutional investors with the opportunity to access the UK’s green infrastructure sector.

The second close has been marked with the acquisition by the fund of GIB’s option on a 10% stake in Gwynt y Môr offshore wind farm. The 576 MW wind farm – located in Liverpool Bay – was officially inaugurated in June of this year.

The Fund now has three three offshore wind parc assets which are able to produce 2,980 GWh of renewable energy annually, enough to power more than 700,000 homes – equivalent to all the homes in Northern Ireland.

On completion of the Gwynt y Môr acquisition more than half of the fund’s capital will be invested in income-generating assets.

Amber Rudd, UK Energy Minister, said: “Offshore wind has been a UK success story and I welcome this long-term, private sector involvement in what is now the largest renewable energy fund in the UK.

“This demonstrates how we are open for business and the best place in the world to invest in offshore wind.”

Karl Smith, Green Investment Bank fund Managing Director, said: “This second successful round of fundraising highlights the growing confidence that home-grown and international investors have in well-developed and well-managed offshore wind assets in the UK.

“We are in advanced discussions with other potential investors and progressing quickly towards final close and reaching our £1 billion target.”

AMF is a limited liability life insurance company that is owned equally by the Swedish Trade Union Confederation (LO) and the Confederation of Swedish Enterprise.

Peder Hasslev, Chief Investment Officer,  AMF, commented: “We are responsible for managing the pensions of four million people in Sweden and we are attracted to opportunities where responsible investments and good returns go hand-in-hand.

“We are very pleased to have committed to GIB’s Offshore Wind Fund as we strongly believe that investing in UK green infrastructure fulfils both requirements.”

The £14 billion Strathclyde Pension Fund is one of the UK’s largest, providing payments to around 200,000 people.

Councillor Paul Rooney, Chairman, Strathclyde Pension Fund, added: “This is our biggest investment to date in green infrastructure in the UK. Our fund was already working closely with the Green Investment Bank to provide finance for community-scale renewable energy projects and we are excited to follow that project by taking a stake in a long-term and globally significant investment in offshore wind power.

“We are confident it is one that will deliver not only sustainable and secure energy infrastructure for the future of our communities, but a sustainable and secure future for our members who are saving for retirement.”

Andrew Jamieson, Chief Executive of the Glasgow-based offshore renewable energy agency (ORE Catapult) commented:

“This is excellent news that reinforces the UK’s primary role in the development of an offshore renewable energy industry that will be a huge economic boon to the UK’s economy in the decades to come.  

“The readiness of the international investment community – and the more risk averse pension funds in particular – to invest in offshore wind is testament to industry’s efforts to reduce risk and lower costs towards parity with fossil-fuel generation.”

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