PensionDanmark in first US offshore wind deal

The Danish pension will provide a $200m mezzanine loan for the Cape Wind project.

Denmark’s labour pension fund will invest $200 million in the form of a mezzanine loan in Cape Wind, the first offshore wind farm in the US, PensionDanmark said in a statement.

“The commitment is conditional upon a final investment decision to be made by the end of the year,” stated the pension fund, the largest in Denmark with assets under management of DKK145 billion (€19.4 billion, $25.4 billion) and 630,000 members.

The loan will be provided through the Copenhagen Infrastructure I fund, managed by Copenhagen Infrastructure Partners (CIP). PensionDanmark launched CIP in 2012, committing DKK6 billion to the fund and is its sole limited partner.

Cape Wind, launched in 2001 by Boston-based Energy Management, is expected to close by the end of 2013, according to the pension fund. Approved for construction in the Nantucket Sound – off the coast of Massachusetts – the wind farm will have up to 130 Siemens turbines of 3.6 megawatts (MW) each, a total capacity of 454MW, and will power about 500,000 homes. It is expected to reduce carbon emissions by more than 777,000 tonnes a year.

“The Cape Wind project has some attractive project characteristics in terms of the physical conditions of the site and an experienced supplier base, and we expect the final project details to be in place later this year,” said CIP Partner Christian Skakkebæk.

Cape Wind is one of several investments PensionDanmark has already made in the energy infrastructure sector.

“We have made equity investments in two offshore wind farms in Denmark and three onshore wind farms in the USA and provided debt financing for onshore wind parks in Sweden and Belgium,” said Torben Möger Pedersen, the pension fund’s chief executive. “At a time when bond yields are very low, this is expected to be an attractive investment opportunity for us.”

Energy utility companies National Grid and NSTAR have already signed 15-year power purchase agreements to buy 50 percent and 27.5 percent of Cape Wind’s power, respectively.

The aim is to close the deal to build the wind farm this year, PensionDanmark said.