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The sovereign wealth funds that are fueling renewable’s fire

Sovereign wealth funds and renewables

Last month, Norway’s $1.3 trillion sovereign wealth fund made its first investment into renewable energy infrastructure. The fund acquired a 50% ownership share in the Ørsted Borssele 1 & 2, the Netherlands’ largest offshore wind project.

“Unlisted renewable energy infrastructure is a new asset class for the fund. We look forward to continuing to execute on our investment strategy for unlisted renewable energy infrastructure,” said Nicolai Tangen, CEO of Norges Bank Investment Management.

It’s not just Norway…

Saudi Arabia recently signed seven (!) new solar power agreements. One of the plants developed by the sovereign wealth fund will be one of the world’s largest. 

In January, Enel Green Power, an Italian renewable energy corporation, signed a joint venture agreement with the Qatar-based sovereign wealth fund, Qatar Investment Authority, to develop renewable energy projects in Sub-Saharan Africa.  

The funds above are among those that have pledged their commitment to the “One Planet Sovereign Wealth Fund Initiative,” a community of global financial institutions with a common goal to rebuild global finance around the Paris Agreement. 

It’s important because of the scale of these funds’ influence. Oil-rich sovereign wealth funds are diversifying their economies away from fossil fuels, moving toward energy investments committed to decarbonization. By incorporating climate risk analysis into their investing strategies (and by virtue of their sheer size), these funds are uniquely positioned to influence the trajectory of the global economy towards sustainable growth. 

On a related note, the Asian Development Bank has just made a powerful pledge: zero coal, oil, or nuclear plant investments.

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