Norway’s $1.3 Trillion Sovereign Fund Makes First Green Infra Investment

Norway’s $1.3 trillion sovereign wealth fund, a pioneer and probably the largest in the world has announced its first investment into renewable energy infrastructure on April 7. The fund, which was in the news for its decision to stop and exit from all investments in fossil fuel-based firms, sold the last of its holdings in such firms early this year. The first investment into green infrastructure, a 50% stake in the Borssele offshore wind farm in the Netherlands from Danish energy firm Ørsted A/S for €1.375 billion is typical of the scale at which the fund operates. 

For Ørsted,  the new investor will be a welcome partner once the transaction is closed by the third quarter this year, with Ørsted continuing to be the wind project’s co-owner and operator. The Borssele wind project has a capacity of 752 megawatts.

The Norwegian sovereign wealth fund was formed in 1990, ironically to invest profits from Norway’s huge oil and gas revenues for a future cushion when the oil ran out. As it turns out global warming has happened before the oil ran out.

The fund generated $123 billion in returns in 2020 has, in recent years faced strong competition for its big cheque writing powers from sovereign wealth funds, including from the middle eastern region. However, it is safe to say at this stage that talk is cheaper than action for most such funds when it comes to investing in renewable energy. At a global level, investments into fresh fossil fuel projects, be it for gas pipelines or petrochemical complexes, have easily dwarfed any investments into renewable energy infra.

Funds like the Norwegian fund have also focused more on the developed world, due to political reasons as well as stringent norms to follow regulations in respect of rules regarding labour, land acquisition, or even sourcing in the supply chain.