Huge Norwegian oil-backed wealth fund invests in offshore wind farm

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The Norwegian sovereign wealth fund has agreed to pay around 1.375 billion euros ($ 1.63 billion) for a 50% stake in one of the world’s largest offshore wind farms, the 752 megawatt Orsted facility (MW) Borssele 1 & 2.

Managed by Norges Bank Investment Management, the fund – whose wealth comes from Norway’s vast North Sea oil and gas reserves – is the largest in the world and worth more than $ 1.3 trillion. In an announcement Wednesday, NBIM described the deal as its “first investment in renewable energy infrastructure”.

The transaction is expected to close in the second or third quarter of 2021. Under the terms of the agreement, Orsted will retain its position as co-owner of the wind farm and will ensure operation and maintenance.

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“We are delighted to have made our first unlisted investment in renewable energy infrastructure, and we look forward to working alongside Ørsted to deliver green energy to Dutch households,” said Mie Holstad, Director real assets at Norges Bank Investment Management, in a statement.

Located 23 kilometers off the Dutch coast, Borssele 1 & 2 uses 94 wind turbines from Siemens Gamesa. According to Orsted, it is the second largest operational offshore wind farm in the world and “provides renewable energy equivalent to the annual electricity consumption of one million Dutch households”.

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Europe is a major player in offshore wind and is home to a number of large-scale installations.

The world’s first offshore wind farm, located in the waters near the Danish island of Lolland, was commissioned in 1991.

In 2020, the sector attracted more than 26 billion euros in investments, a record amount, according to recent figures from the industry body WindEurope.

The offshore wind industry in the United States, on the other hand, is still small but could see significant expansion in the coming years under new plans announced by the Biden administration at the end of March.

Norway’s strategy

The Norwegian fund holds what NBIM describes as “a small stake” in more than 9,000 companies around the world, with its investment strategy based on guidelines set by the country’s finance ministry.

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“The fund should not be invested in companies that produce certain types of weapons, base their operations on coal or produce tobacco,” says NBIM.

“The fund should also not be invested in companies which, through their behavior, contribute to violations of fundamental ethical standards,” he adds.

As of March 3, 2021, companies excluded from what NBIM describes as “the fund’s investment universe” include: German utility company RWE; tobacco giant Philip Morris International; and BAE Systems.

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