PensionDanmark in £160m UK biomass deal

The pension has formed a JV with Burmeister & Wain Scandinavian Contractor and plans to develop further biomass plants internationally.

PensionDanmark, which manages savings of over DKK 145 billion (€19 billion; $26 billion), has invested in a UK biomass plant via a joint venture with Danish energy developer Burmeister & Wain Scandinavian Contractor (BWSC). 

The £160 million (€187 million; $250 million) investment will see BWSC commit £32 million, with PensionDanmark funding the £128 million balance via its Copenhagen Infrastructure I fund, managed by Copenhagen Infrastructure Partners, its energy-focused fund manager. 

The two parties – via joint venture BWSC PLC – will own and operate the 40-megawatt biomass plant in Lincolnshire, in the east of England, which will use locally sourced straw to produce enough energy to serve up to 70,000 homes. The plant is expected to be operational in early 2016 and will be run by BWSC for 15 years. 

“We have found a model that provides PensionDanmark an attractive return with limited risk. The risk is limited by the fact that the majority of PensionDanmark’s investment is in the form of loans and the bulk of earnings are regulated, with the costs fixed via long-term contracts,” commented Torben Moger Pederson, the pension’s chief executive. 

The joint venture plans further international investments, but neither of the parties could be reached for comment on the joint venture’s size or where its future investments will be. 

In late June, PensionDanmark clinched its first ever US offshore wind farm deal, with a $200 million mezzanine loan, also provided via the Copenhagen Infrastructure I fund. PensionDanmark is the sole investor in the fund, with a DKK 6 billion commitment. 

Denmark’s labour pension fund counts 630,000 members across the private and public sectors. It currently has DKK 6 billion directly invested in infrastructure and expects to invest a further DK 12 billion in the asset class over the next four years. It said most new investments “will be energy-related and half will be invested via Copenhagen Infrastructure I”.