Danish fund seeks €12bn for renewables projects from Taiwan to the Irish Sea

Fund manager CIP has already reached its first close of €5.6bn and has investors lined up to more than double that amount within the next 12 months

Mon, 10 Jul, 2023 - 15:29

William Mathis

Copenhagen Infrastructure Partners (CIP) is looking to raise €12bn to invest in renewable energy, making it among the biggest ever funds dedicated to the transition away from fossil fuels.

The Danish fund manager reached its first close of €5.6bn and already has investors lined up to more than double that amount within the next 12 months, managing partner Jakob Baruël Poulsen said in an interview.

It is a significant boost for the renewable power sector that needs an exponential increase in capital to hit climate goals, just as rising interest rates threaten returns.

Along with Statkraft, CIP is developing an Irish Sea wind project as part of the ‘North Irish Sea Array’.

“Every time we create a new fund, it doubles in size,” Mr Baruël Poulsen said. “The main purpose of the fund is to make a good return.

The nice side benefit is we have a material contribution to fighting the climate problem, which is one of the biggest problems we human beings have ever faced.

Record investment in renewables is set to grow further as governments seek to reduce dependence on climate-warming hydrocarbons.

CIP sees an improving case to spend more on renewables as green energy becomes increasingly cost competitive with fossil fuels, governments bolster support for development and power prices rise.

“I’ve now been in this business for 25 years and it’s very clear that the renewable energy market has never been more attractive than it is now,” Mr Baruël Poulsen said.

The fund is the fifth of its kind raised by CIP since it was founded in 2012. When fully subscribed, it will be significantly larger than its predecessor, which started with €1.5bn and expanded to €7bn during the fund-raising process.

CIP’s flagship funds only invest in renewable power assets that the firm develops.

That distinguishes it from other giant green investment funds — such as those from Brookfield Asset Management — which buy up already constructed projects and include a wider scope of technologies including nuclear power.

Mr Baruël Poulsen started CIP with three partners after helping to build the offshore wind business at what is now Orsted, the firm uses the business model they honed at the Danish utility.

CIP’s investments include the first commercial-scale wind farm off the coast of the US, one of the largest wind farms in Spain and a growing pipeline of offshore wind projects from Taiwan and California to the Irish Sea.

The fund is targeting 10% to 12% annual returns, according to Mr Baruël Poulsen. The healthy outlook for investment comes as oil majors including Shell and BP retreat from aggressive pushes into renewable power, particularly offshore wind, because their executives say the returns are too low.