CPPIB goes big on renewables with $1.75bn Enbridge agreement

The agreement with the Canadian energy company gives CPPIB a 49 percent stake in North American and European renewables assets as well as a plan to jointly develop more.

The Canadian Pension Plan Investment Board has formed a clean energy partnership with Enbridge, which is seeded with a C$2.25 billion ($1.75 billion; €1.48 billion) acquisition of the energy firm’s assets.

CPPIB has been an active investor in renewables over the past six months and cemented that strategy on Wednesday by taking a 49 percent stake in Calgary-based Enbridge’s North American solar and wind assets and a 49 percent stake in two German offshore wind projects – Hohe See, which is currently under construction, and its expansion. CPPIB and Enbridge also announced they would form a 50-50 joint venture to invest in offshore wind projects in Europe that are in development, construction or operation.

“Through this investment, we are able to gain immediate exposure to a high-quality portfolio of wind and solar assets,” Bruce Hogg, head of CPPIB’s power and renewables group, said in a statement. “Through the joint venture, we will have the opportunity to grow our renewables portfolio across the European offshore wind market. As power demand grows worldwide, we will continue to seek opportunities to expand our power and renewables portfolio globally.”

The North American renewables portfolio CPPIB invested in includes all 14 of Enbridge’s operating wind and solar assets in Canada as well as the Cedar Point wind farm in Colorado and the Silver State North solar project in Nevada. Combined, the portfolio generates 1.3GW.

The Canadian pension also acquired nearly a quarter of the 497MW Hohe See offshore wind projects, purchasing just under half of the 49.9 percent stake Enbridge bought for C$1.7 billion in February 2017. The Hohe See projects are expected to begin service in 2020.

CPPIB said it invested C$1.75 billion to acquire the North American and European assets and committed around C$500 million for additional construction costs as part of the Hohe See development.

The deal is expected to close in the third quarter.

Enbridge will continue to operate the assets. The firm’s president, Al Monaco, said in a statement the deal with CPPIB is part of its plan to sell $3 billion of assets this year. Enbridge also announced on Wednesday it had sold its US midstream business Midcoast Operating for $1.12 billion.

“This transaction, in addition to our other funding actions taken since April, accelerates funding for our secured-capital programme and gives us increased financial flexibility,” Monaco said.

CPPIB, which manages around C$337.1 billion as at 31 December, has recently accelerated its investment in renewables. Since the end of last year, the Canadian pension has made commitments to renewables assets in Europe and North America, a $144 million investment in Indian clean energy firm ReNew Power Ventures and two wind farms in Brazil.