CPP Investments Launches European Renewables Platform
Canada Pension Plan Investment Board (CPP Investments) has established a new, U.K.-based platform – Renewable Power Capital Limited (RPC). The platform is backed by CPP Investments’ multi-billion Power & Renewables investment strategy and will invest in solar, onshore wind and battery storage, among other technologies, across Europe. The business will be a majority-owned, but independently operated portfolio company.
RPC is headed up by Bob Psaradellis as CEO, formerly of GE Energy Financial Services, where he successfully closed equity investments in energy assets with over €5 billion in enterprise value, and raised over $14 billion in third-party equity and debt for GE’s power, renewables, oil & gas, aviation and healthcare projects globally.
The business is chaired by Shaun Kingsbury CBE, formerly Chief Executive of the UK Green Investment Bank, which he led from its formation with backing from the UK Government to become the largest renewable energy investor in the UK and ultimately on to a successful privatization in 2017.
Bruce Hogg, Managing Director, Head of Power & Renewables, CPP Investments, said “The establishment of RPC brings together our long-term, flexible capital and a management team with a depth of expertise and sophisticated understanding of the European renewable energy market. The business is well-positioned to create value through enhancing routes to market, driving more efficient commercialization strategies and making improvements to assets’ capital structures as many European renewables markets transition towards a subsidy-free regime.”
RPC will seek to enable the energy transition through a patient, long-term investment strategy underpinned by an innovative approach to managing development and merchant risk and the development of holistic capabilities to create long-term value through owning and operating renewable energy assets.
The management team includes Mark Hanson as General Counsel & Chief Operating Officer, Mariano Berges as Chief Commercial Officer, Steve Hunter as Director of Power Markets and Daniel Szentirmai as Principal.
RPC will build a scalable and diversified pan-European platform, initially targeting development, ready-to-build, and operating assets. RPC will have capabilities across different power markets, and across the value chain from development, through construction and into operations.
Bob Psaradellis, CEO, Renewable Power Capital, said “Our new platform is open to investments, initially in the Nordics and Spain, and expanding to other European jurisdictions thereafter. Drawing on our deep expertise in the sector, we can work together in partnership with developers, wind and solar equipment manufacturers, construction companies, and investment partners as the market continues to mature and addresses long-term structural change. We have a well-developed pipeline of opportunities and expect to make our first investment in early 2021.”
The platform will have access to flexible capital from CPP Investments allowing it to structure investments that recognise the changing market dynamics in Europe and range of risk-adjusted returns available.
CPP Investments has made approximately C$9 billion of equity commitments to renewable energy globally as of September 30th, 2020, with investments in development and operational assets across onshore wind, offshore wind, solar, hydro and associated storage and distribution. The renewable energy investment strategy has approximately 4.5 GW of operating assets in Brazil, Canada, Germany, Japan and the USA, with investment professionals in Hong Kong, London, Mumbai, New York and Toronto.
About CPP Investments
Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that invests around the world in the best interests of the more than 20 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments in public equities, private equities, real estate, infrastructure and fixed income are made by CPP Investments. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At September 30, 2020, the Fund totalled C$456.7 billion.
For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Facebook or Twitter.About Renewable Power Capital
Renewable Power Capital is a pan-European renewable energy investment platform established in 2020, backed by CPP Investments. Renewable Power Capital is registered in the United Kingdom, with headquarters in London. We invest in the development, construction, and long-term ownership of solar, onshore wind and battery storage projects, enabling the energy transition and driving stable long-term, risk-adjusted returns. Our flexible mandate allows us to structure investments that recognise the changing market dynamics in Europe and to develop innovate solutions for managing development, construction, and merchant investments.
For more information, please visit www.renewablepowercapital.com
Another fantastic deal for CPP Investments where it's providing capital to establish a first class European renewable energy platform that will grow its renewable energy investments in that region.
And when I say first class, I mean it. Bob Psaradellis, CEO of Renewable Power Capital was formerly of GE Energy Financial Services, where he successfully closed equity investments in energy assets with over €5 billion in enterprise value, and raised over $14 billion in third-party equity and debt for GE’s power, renewables, oil & gas, aviation and healthcare projects globally.
The business is chaired by Shaun Kingsbury CBE, formerly Chief Executive of the UK Green Investment Bank, which he led from its formation with backing from the UK Government to become the largest renewable energy investor in the UK and ultimately on to a successful privatization in 2017.
In fact, the UK Green Investment Bank (now the Green Investment Group) was a non-departmental public body of the UK's Department for Business, Energy and Industrial Strategy (BEIS), but is now an independent organization owned by Macquarie Group Limited.
Both Mr. Psaradellis and Mr. Kingsbury have extensive experience in financial renewable energy deals and the entire senior management team at Renewable Power Capital is extremely competent and will work hard to expand CPP Investments' renewable energy portfolio in Europe.
As their website states:
Renewable Power Capital is a pan-European renewable energy investment platform established in 2020, backed by CPP Investments. Renewable Power Capital is registered in England and Wales, with headquarters in London. We invest in the development, construction and long-term ownership of onshore wind and solar projects, enabling energy transition and driving stable long-term, risk-adjusted returns. Our flexible mandate allows us to structure investments that recognise the changing market dynamics in Europe and to develop innovative solutions for managing development, construction and merchant investments.
Renewable Power Capital is led by a seasoned and established team of energy investment professionals with deep renewable power, technical and operational expertise and a strong common purpose. We are dedicated to the renewable energy sector, with a truly long-term mind set, creating value over decades rather than months. We are committed to industry leading practices and standards through all our operations, with a diligent focus on health, safety and environmental management.
Renewable Power Capital is focused on building strong, lasting partnerships centred on trust and integrity in alignment with the values of our investor and our global network of CPP Investments’ portfolio companies. Renewable Power Capital aims to pioneer the European renewables sector, accelerating the already rapid growth and playing a key role in making the energy transition a reality.
You can find out more about Renewable Power Capital by following this link to a recent interview with Bob Psaradellis* (Renewable Power Capital, President and CEO).
What We Do
Renewable Power Capital invests in, develops and manages European renewable energy projects, specialising in onshore wind, solar and battery storage technology. Initially our primary focus will be on the Nordic and Spanish markets with a vision to expand into other key growth regions across Europe as we scale.
Renewable Power Capital provides management services to our portfolio of project SPVs using a team of experienced professionals and technical experts. We adopt a long-term asset ownership strategy with a primary objective to generate stable long-term, risk-adjusted returns for our shareholders.
CPP Investments isn't the only one expanding its renewable energy operations in Europe.
Recall, in mid October, I discussed how CDPQ expanded into renewable energy infrastructure in Spain with the acquisition of a 216-MWp solar portfolio from Spanish firm Q-Energy.
As I stated then, CDPQ is building out its renewables platform in Spain, a country that is taking sustainable energy to the next level. This is a long-term platform, one that will provide great cash flows over many years.
With the launch of Renewable Power Capital, which is a wholly owned subsidiary of CPP Investments, Canada's largest pension fund now has a dedicated platform to expand its European renewable energy investments, focusing first in Spain and Nordic market but with a vision to expand in other key growth regions in Europe.
Bruce Hogg, Managing Director, Head of Power & Renewables, CPP Investments, said it best: “The establishment of RPC brings together our long-term, flexible capital and a management team with a depth of expertise and sophisticated understanding of the European renewable energy market. The business is well-positioned to create value through enhancing routes to market, driving more efficient commercialization strategies and making improvements to assets’ capital structures as many European renewables markets transition towards a subsidy-free regime.”
Every major pension fund in the world wants to be part of the transition to a net zero economy, and investing in renewable energy will provide them with steady and attractive yields over the long run.
Having a dedicated platform company like RPC will allow CPP Investments to be part of this transition to a net zero economy over the long run, and it will pay nice dividends to the 22 million+ members of the Canada Pension Plan.
In related news, CDPQ announced a $50 million private placement to help Xebec Adsorption Inc. (TSXV: XBC) (Xebec), a global provider of clean energy solutions, in its bid to acquire Green Vision Holding B.V., the parent company of HyGear Technology and Services B.V. (“HyGear”) in the Netherlands for consideration of €82.0 million (approximately $127.3 million). Details of this deal can be viewed here.
Also, Ontario Teachers'-backed Sidewalk Infrastructure Partners (SIP) announced it invested in another transformative clean energy project, this time with OhmConnect to make the power grid in California more efficient and reliable. Details of that deal are available here.
Interestingly, in mid November, Ontario Teachers' Finance Trust issued its first inaugural green bond:
Ontario Teachers’ Finance Trust (OTFT) announced today the issuance of a €750 million 10-year Green Bond. The issuance is fully, unconditionally and irrevocably guaranteed by Ontario Teachers' Pension Plan Board (Ontario Teachers’). The decision to issue a green bond builds on Ontario Teachers’ long history of responsible investing.
An amount equal to the net proceeds from this issuance will be allocated to assets that are environmentally and socially responsible and tackle critical issues like climate change. Eligible green assets satisfy one or more of the following:
- Replace direct fossil-fuel use;
- Facilitate low-carbon solutions;
- Significantly reduce emissions;
- Remove/store carbon;
- Help adapt to climate change impacts; or
- Help preserve or conserve scarce natural resources
“We believe a transition to a net zero economy is underway. This is expected to bring a host of attractive investments to Ontario Teachers’ that enable and support this transition, with the objective of earning strong risk-adjusted returns while also having a positive impact,” said Ziad Hindo, Chief Investment Officer at Ontario Teachers’. “OTFT’s green bond issuance allows us to access capital to support the much-needed investments to transition towards a sustainable future.”
This marks OTFT’s inaugural green bond issued under the Ontario Teachers’ Green Bond Framework (Framework), which was prepared in accordance with the four core components of the International Capital Markets Association Green Bond Principles.
The Framework was reviewed by CICERO Shades of Green, a world leader in providing second opinions on the qualification of debt for Green Bond status. It received a “CICERO Dark Green” shading indicating strong alignment with a low-carbon climate resilient future as well as a governance score of “Excellent.”
As you can read, when it comes to a sustainable future, Canada's large pensions aren't just talking the talk, they're walking the walk.
Like Ziad Hindo states, the transition to a net zero economy is underway, and Canada's big pensions plan on being part of this transition and making profits along the way.
Issuing green bonds helps raise funds to invest in renewable energy projects but I believe it's only a matter of time before OTPP follows CDPQ and CPP Investments and sets up its own renewable energy platform in Europe. Others will follow suit too.
Lastly, earlier this week, I posted this article on how Shell executives are quitting over discord over green push:
Royal Dutch Shell has been hit by the departure of several clean energy executives amid a split over how far and fast the oil giant should shift towards greener fuels.
The wave of resignations comes just weeks before Shell is set to announce its strategy for the energy transition. Some executives have pushed for a more aggressive shift from oil but top management is more inclined to stick closer to the company’s current path, according to four people familiar with the matter.
Marc van Gerven, who headed the solar, storage and on-shore wind businesses at Shell, Eric Bradley, who worked in Shell’s distributed energy division, and Katherine Dixon, a leader in its energy transition strategy team, have all left the company in recent weeks.
Dorine Bosman, Shell’s vice-president for offshore wind, is also due to leave the company. Several other top executives in the clean energy part of the business also plan to exit in the coming months, two of the people said.
You can read the rest of the article here.
A couple of points. First, executive talent in clean energy quitting a major oil company like Shell is to be expected, there will be pushback from those that want to stick to traditional energy.
This talent now represents opportunities for Canada's large pensions looking to expand their renewable energy platform, provided they can compensate them well, which they can.
But it also shows you how you can't force ESG standards on every company, especially oil giants, because maybe the pushback here is legitimate and in the best long term interests of investors, including large Canadian pensions.
I'm increasingly uncomfortable with environmental zealots raising ESG to a religious status and I know quite a few pension executives who privately agree with me (it's suicidal to criticize ESG publicly).
All these zealots who talk up "diversity and inclusion" should also respect diversity of views and respect diverging viewpoints which might be in the best interests of pension members over the long run.
After I wrote my comment lambasting those who wrongly criticized CPP Investments' high-carbon approach, I was accused of being a "climate change denier" by internet trolls who work for environmental groups.
These idiots didn't even bother reading my comment and they know nothing about me.
I'm not a climate change denier, I'm a deep cynic, I knew the world was screwed when I took Tom Naylor's course on ecological economics at McGill University in the mid 90s, and despite the Paris Accord (most people never bothered to read it) and many feel good accords, I still think the world is screwed when it comes to climate change.
What else? I welcome Canada's large pensions' push for more ESG disclosure but I truly believe more needs to be done, a lot more.
Importantly, all these renewable energy platforms investing in solar and wind farms are great but if Canada's large pensions really want to make a difference, and invest over the very long run, they'd partner up with large engineering companies and invest in nuclear power plants.
Michael Sabia, are you paying attention? Now that you've been appointed the deputy minister of Finance Canada, let me put you in touch with skeptical Greek-Canadian engineers who will explain to you why nuclear is the way forward, not solar or wind farms!
Let me stop there before I get the ESG zealots after me, trolling me on LinkedIn and Twitter (sorry, no Instagram, Facebook or Tik Tok account, I hate that nonsense).
For the rest of you, keep in mind, respecting diversity and inclusion means respecting differences in the way people act and think. Respect diverging viewpoints even if they go against everything you believe, be respectful and open-minded and listen carefully to all views, not just those in your head.
Remember, ESG is not a religion, it's another approach which complements the way long-term investors like pensions invest across public and private markets to ensure the long term sustainability of their investments.
Below, earlier today, the Canadian Club of Toronto held a free virtual event on ESG and Sustainable Investing featuirng Gerald Butts (Eurasia Group), Alison Loat (OPTrust), and Veronica Chau (BCG), and moderated by CPP Investments' former CEO and current Chair of AIMCo, Mark Wiseman.
Take the time to listen to this event, it is a very interesting and thought provoking discussion.
Also, in case you missed it, OPTrust President and CEO Peter Lindley’s keynote address - Where Risks Become Opportunities: OPTrust’s Evolution to Sustainable Investing – at the CAIP Virtual Conference series. Great stuff, heard this earlier, Peter explains it very well. Watch it here if it doesn't load below.
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