Copenhagen Infrastructure Partner (CIP) has pioneered renewable energy investment since 2012, when it set up its first fund in the space. Its hands-on approach, where it designs and develops greenfield projects across the renewable spectrum, rather than buying ready-made assets, has borne fruit. CIP now manages assets for around €16bn for dozens of institutional investors from across the world. With the governments and companies doubling down on their net-zero commitments and the electrification of the world economy expected to accelerate, CIP is raising the stakes even further, partner Steen Lønberg Jørgensen tells fDi.
Q: Has the mounting environmental, social and corporate governance (ESG) wave made CIP’s investment case stronger?
A: That’s certainly the case. In our first fund in 2012, our investors were mostly Danish, Swedish and Norwegian pension funds and insurance companies, who were among the few investors focusing on ESG. In the past couple of years, that focus has spread to all countries around the world. Today, in the EU, the US, Canada and big Asian countries, all institutional investors have a focus on ESG. As a result, our Copenhagen Infrastructure IV brought together around 100 institutional investors. At the moment, we have €16bn of assets under management, and are targeting between €75bn and €100bn by 2030.
Q: Why is CIP a direct investor in greenfield renewable energy projects, when most fund managers prefer to invest in existing projects?
A: When we design a project from scratch and pick the suppliers, we outline the risk profile of the project for the next 20 years. By engaging early, we can design a risk-return profile that fits our needs, instead of buying a project that fits the needs of its developer. Also, a more recent reason is that the price of brownfield projects has gone up because more people are looking into the space and expect returns go down.
Q: Offshore wind power assets make up the bulk of your asset portfolio, although you have recently announced a big solar power project in Canada. What’s your strategy for finding the right technology to invest in?
A: In our traditional funds, we focus on very large-scale projects — offshore wind fits this well. The bigger the better. With regards to onshore wind and solar power, we are very selective and only go for big projects: 500-megawatt projects, or one-gigawatt is even better. At the same time, in countries where there is a high degree of renewables in the energy mix, and therefore high intermission, we look at opportunities in transmission infrastructure and pumped-storage hydro. We also have many waste-to-energy projects, mostly in the UK. The new €800m Energy Transition funds mostly focus on ‘power-to-x’ projects.
Q: CIP doesn’t have any investment in Africa or Latin America, despite their potential for renewable energy generation. What needs to change for an investor like CIP to invest in these regions?
A: We need visibility when it comes to energy policy and regulation. There needs to be consistency in the policy and regulatory regime. As a greenfield investor, we need to see a road to get all the permits and necessary grid connections. While we can deal with all the commercial parts of the project, its surroundings need to be visible and clear. A success case in this regard is Chile, where we are again looking at power-to-x opportunities, as the market for wind and solar power is very mature. We are also looking at Brazil, where we expect to do a lot in the next couple of years.
This article first appeared in the August/September print edition of fDi Intelligence. View a digital edition of the magazine here.