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The Norwegian sovereign wealth fund has agreed to pay around 1.375 billion euros for a 50 percent stake in one of the world’s largest offshore wind farms, Orsted’s 752 megawatt (MW) Borssele 1 & 2 plant.
Managed by Norges Bank Investment Management, the fund, whose assets come from Norway’s vast oil and gas reserves in the North Sea, is the largest in the world and is valued at more than $ 1.3 trillion. In an announcement on Wednesday, NBIM described the deal as “the first investment in renewable energy infrastructure”.
The transaction is expected to close in the second or third quarter of 2021. According to the terms of the contract, Orsted will retain its position as co-owner of the wind farm and will take over the operation and maintenance.
“We are pleased to have made our first unlisted investment in renewable energy infrastructure and look forward to working with Ørsted to deliver green energy to Dutch households,” said Mie Holstad, Chief Real Assets Officer at Norges Bank Investment Management a statement.
Borssele 1 & 2 is 23 kilometers off the Dutch coast and 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”.
Europe is a major player in offshore wind energy and is home to a number of large-scale installations.
The world’s first offshore wind farm in waters near the Danish island of Lolland went into operation in 1991.
According to the latest information from the industry association WindEurope, the sector recorded investments of over 26 billion euros in 2020, a record amount.
The US offshore wind sector, on the other hand, is still small, but could expand significantly in the coming years, according to new plans announced by the Biden government in late March.
The Norwegian fund holds what NBIM calls “small stakes” in over 9,000 companies worldwide and its investment strategy is based on guidelines set by the country’s Treasury Department.
“The fund may not be invested in companies that manufacture certain types of weapons, run coal or produce tobacco,” says NBIM.
“The fund is also not allowed to invest in companies whose behavior contributes to violations of basic ethical norms,” he added.
As of March 3, 2021, companies excluded from what NBIM calls the “investment universe of the fund” include: the German utility RWE; Tobacco giant Philip Morris International; and BAE Systems.