Danish pension funds target green energy

PensionDanmark and PBU have agreed a €100m co-investment in a renewable energy fund run by a third pension, AP Pension. In a separate development ATP, a fourth Danish pension, will channel €1bn to a climate change fund.

Perhaps unsurprisingly for a country which spearheaded the year’s most important clean energy event – the Copenhagen Climate Conference – Danish pension funds are increasingly targeting green energy.
The latest investment in the sector comes from PensionDanmark, a €10 billion cross-sector pension plan, and PBU, the country’s €3.5 billion pension for early childhood teachers, which have agreed to co-invest €100 million in a renewable energy fund, according to media reports. The fund, Green Power Partners, is run by another Danish pension, AP Pension, and Danish private investment firm Proark.
Green Power Partners will primarily focus on sun and wind energy in Europe and has already invested some €18 million in three solar cell parks in the vicinity of Barcelona. The investment is underpinned by guarantees from the Spanish government stipulating that the electricity produced by the parks will be able to be sold at a fixed inflation-adjusted price over the next 30 years.
In December, ATP, Denmark’s largest pension fund, said it was planning to set up a climate change fund – the Institutional Investor Climate Change Action Fund for Emerging Economies – targeting clean energy projects in emerging markets. The pension said it would back the fund with €1 billion and was in talks with other like-minded institutional partners to join the initiative.
The new venture would operate under private sector conditions and would only target projects with an appropriate risk profile. As such, ATP said the fund’s launch will be conditional on a credible global policy on climate change and the formation of partnerships with key international financial institutions, such as the World Bank or regional development banks. Once launched, it will prioritise the co-financing of “shovel-ready” projects.