CIP raises €800m for debut energy transition fund

The Danish fund manager has already invested in five greenfield projects through CI ETF I, including a green hydrogen project in Australia and a 1GW electrolysis plant in Denmark that will produce green ammonia.

Just four months after Copenhagen Infrastructure Partners launched its first energy transition fund, the Danish manager has raised €800 million from a group of institutional investors, including Danish pension funds PensionDanmark and PFA.

Copenhagen Infrastructure Energy Transition Fund I, which reached first close on Monday, has a final target of €2.25 billion, and is expected to reach final close in late Q2 2022, CIP partner Steen Lønberg Jørgensen told Infrastructure Investor.

CIP and wind turbine manufacturer Vestas, which last December acquired a 25 percent stake in the firm, have also committed to the fund. Jørgensen declined to comment on the size of those commitments, but in December said CIP would invest around 2 percent of the fund’s target size.

The fund will invest in industrial scale Power-to-X projects, that is, projects that convert surplus electric power into other energy sources. PtX can decarbonise “hard to abate sectors such as shipping, steel production and agriculture through the use of green fuels and feedstock and CO2-free fertilisers”, CIP said in a statement.

The fund will primarily focus on greenfield projects in Western Europe, North America, Australia and developed Asian countries. It will also invest in advanced biofuels, carbon capture and utilisation/storage and other infrastructure technologies. It is targeting a net IRR of more than 14 percent, Jørgensen said.

CIP has already invested in two PtX projects. The first is the Murchison Renewable Hydrogen Project in Australia, a 5GW wind and solar plant that will convert the power produced into green hydrogen. Once operational, it will export green ammonia to Asian markets – primarily Japan, South Korea and Taiwan. It is being developed by Hydrogen Renewables Australia, a developer with whom CIP partnered last November.

The second, announced in February, is Høst, a 1GW electrolysis plant in Denmark that will source power from North Sea offshore wind turbines to produce green ammonia, which is expected to be used as feedstock for CO2-free fertiliser in agriculture and as a green fuel for the shipping industry. In addition, the excess heat will be used to provide CO2-free heating for around 50,000 homes in the town of Esbjerg, according to the statement.

The fund has also invested in another three greenfield projects, Jørgensen said, but they remain confidential.

According to the statement, CIP will apply the same de-risking approach it applies to all its funds, which includes through project design, partner selection and contracting. “Once de-risked, the projects are expected to have core infrastructure characteristics including long-term offtake contracts.”