CPP Investments Creates New Sustainable Energy Group
Razak Musah Baba of IPE Real Assets reports that CPP Investments names Bruce Hogg as head of a new sustainable energy unit:
CPP Investments has combined its energy and resources investment division with its power and renewables business to create the C$18bn (€12.1bn) Sustainable Energy Group (SEG) led by Hogg as managing director.
Hogg, who joined 14 years ago, was most recently managing director and head of the pension fund’s power and renewables business.
Avik Dey, managing director and head of energy and resources at CPP Investments, will act as senior advisor to CPP Investments, supporting SEG and the office of the CEO over the next six months, following which he has decided to return to his entrepreneurial roots.
“The creation of the Sustainable Energy Group with significant, flexible capital positions us extremely well to pursue the best market opportunities across the entire energy spectrum. This, coupled with a deep, highly experienced team, will allow SEG to generate significant long-term value for the Fund,” Hogg said.
Deborah Orida, senior managing director and head of real assets at CPP Investments, said: “The energy sector is one of the most important enablers of the global economy and is composed of a wide spectrum of suppliers from conventional to renewable.
“Along our unique investment horizon, we see a dramatic opportunity to invest in, and support, the evolution and innovation occurring across the sector.”
In December last year, CPP Investments established Renewable Power Capital (RPC), a European renewable energy platform based in the UK, and appointed Bob Psaradellis to act as CEO of RPC.
At the time, CPP Investments, which manages the C$476bn funds of the Canada Pension Plan, said RPC will be funded by the C$9.1bn power and renewables investment strategy.
Rob Kozlowski of Pensions & Investments also reports that CPPIB appoints new head of sustainable energy group:
- Energy & Resources and Power & Renewables investment groups become Sustainable Energy Group
- Builds on existing investment strengths in renewables, conventional energy and innovation
- Positions CPP Investments to become the leading global energy investor
Toronto, Canada (April 6, 2021) – Canada Pension Plan Investment Board (“CPP Investments”) is creating the Sustainable Energy Group (SEG), a new investment group that combines the organization’s expertise in renewables, conventional energy and new technology and service solutions. SEG will generate compelling investment opportunities for the Fund, positioning CPP Investments as the leading global energy investor.
Through the combination of the Energy & Resources (E&R) and Power & Renewables (P&R) groups, SEG will have approximately $18 billion in assets, making it highly competitive and flexible in the large and dynamic global energy sector.
According to the Bloomberg New Energy Outlook 2020 report, around US$15.1 trillion is expected to be invested in new power capacity alone by 2050. SEG is well positioned to pursue a variety of opportunities in this, and the broader sustainable energy market, having combined expertise in conventional energy, renewable energy, carbon capture as well as emerging and disruptive opportunities through its innovation and technology and services team.
“The energy sector is one of the most important enablers of the global economy and is composed of a wide spectrum of suppliers from conventional to renewable. Along our unique investment horizon, we see a dramatic opportunity to invest in, and support, the evolution and innovation occurring across the sector,” says Deborah Orida, Senior Managing Director and Head of Real Assets, CPP Investments. “CPP Investments is exceptionally well placed to be among the winners, in part through our partnership model alongside companies willing to grasp the future and forge ahead.”
Bruce Hogg will lead the SEG as Managing Director, Head of Sustainable Energy Group. Mr. Hogg was most recently Managing Director, Head of Power & Renewables and has more than two decades of real assets investing experience. He joined CPP Investments 14 years ago, and during that time grew the Infrastructure team’s global business. More recently, he led the team that built a P&R portfolio of more than $9 billion in three years.
“The creation of the Sustainable Energy Group with significant, flexible capital positions us extremely well to pursue the best market opportunities across the entire energy spectrum. This, coupled with a deep, highly experienced team, will allow SEG to generate significant long-term value for the Fund,” says Bruce Hogg, Managing Director, Head of SEG, CPP Investments.
Avik Dey, Managing Director, Head of Energy & Resources, will act as Senior Advisor to CPP Investments, supporting SEG and the Office of the CEO over the next six months, following which he has decided to return to his entrepreneurial roots.
“On behalf of CPP Investments, I’d like to acknowledge Avik for his leadership of the Energy & Resources team. His vision played a key role in the creation of the Sustainable Energy Group and we thank him for his significant contributions to the organization over the past seven years,” added Ms. Orida.
About Sustainable Energy Group (SEG)
SEG takes advantage of growing market opportunities as the energy sector evolves and global power demand grows, especially for low-carbon energy alternatives. The SEG group was created because CPP Investments’ scale, flexibility and long-term horizon align with the energy and power industry’s dynamics, allowing us to better access attractive investments. The group holds a diversified portfolio primarily comprised of long-term tangible assets, including renewable energy sources such as wind, solar and hydro, as well as conventional power, upstream oil & gas, energy midstream, carbon capture and Liquefied Natural Gas (LNG). It also invests in areas of innovation, technology and services to the energy industries and manages agriculture investments. SEG had approximately $18 billion in assets as at December 31, 2020.
About CPP Investments
Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Fund in the best interest of the more than 20 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income. 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 December 31, 2020, the Fund totalled $475.7 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Facebook or Twitter.
So what is this all about? Basically, CPP Investments is consolidating its entire energy group under one umbrella -- the Sustainable Energy Group (SEG) -- a new investment group that combines the organization’s expertise in renewables, conventional energy and new technology and service solutions.
SEG's mandate is very clear: to generate compelling investment opportunities for the Fund, positioning CPP Investments as the leading global energy investor.
Recall, late last year, CPP Investments established Renewable Power Capital (RPC), a European renewable energy platform based in the UK, and appointed Bob Psaradellis to act as CEO of RPC.
The RPC team has tons of great experience and is already ramping up. Earlier this year, it made its first investment by committing to the acquisition of a 100% ownership interest in a 171MW portfolio of onshore wind projects from OX2, a leading developer and constructor of large-scale onshore wind power in Europe, in a transaction valued at €245 million.
Last week, it announced it has entered into a 50:50 joint venture (“JV”) with Benbros Solar S.L. (“Benbros”), an experienced Spanish photovoltaic developer, to develop 14 solar energy projects across Spain. Through the partnership, RPC and Benbros will work together on a portfolio of 3.4GW across the projects located within the regions of Andalucía, Extremadura, Castilla la Mancha, Aragon and Murcia.
There's no doubt that RPC will be a major player in the European renewable energy space.
The Sustainable Energy Group (SEG) will look above and beyond that space, however, to invest across the energy spectrum where market opportunities lie.
And that includes conventional energy too as well as new technologies that will disrupt energy.
Bruce Hogg will be leading this new group and it makes sense since he was the Managing Director of Power and Renewables and they decided he needs to take on more responsibilities.
As far as Deborah Orida, Senior Managing Director and Head of Real Assets at CPP Investments, she is very clear in her statement:
“The energy sector is one of the most important enablers of the global economy and is composed of a wide spectrum of suppliers from conventional to renewable. Along our unique investment horizon, we see a dramatic opportunity to invest in, and support, the evolution and innovation occurring across the sector. CPP Investments is exceptionally well placed to be among the winners, in part through our partnership model alongside companies willing to grasp the future and forge ahead.”
CPP Investments is basically taking a holistic and comprehensive approach to energy to make sure it capitalizes on all opportunities from conventional to renewable and anything in between.
I think this makes perfect sense and it will be harder for critics to criticize CPP Investments' high-carbon approach because now it's all going to fall under the Sustainable Energy Group (SEG).
Notice the name "sustainable energy" which also includes conventional energy.
If you ask me, very smart of CPP Investments to do this, one group dealing with all energy matters.
Lastly, today I read something Mona Dajani posted on Linkedin, namely, that the world is adding record new renewable energy capacity in 2020:
Global renewable energy capacity additions in 2020 beat earlier estimates and all previous records despite the economic slowdown that resulted from the COVID-19 pandemic. According to data released today by the International Renewable Energy Agency (IRENA) the world added more than 260 gigawatts (GW) of renewable energy capacity last year, exceeding expansion in 2019 by close to 50 per cent.
IRENA’s annual Renewable Capacity Statistics 2021 shows that renewable energy’s share of all new generating capacity rose considerably for the second year in a row. More than 80 per cent of all new electricity capacity added last year was renewable, with solar and wind accounting for 91 per cent of new renewables.
Renewables’ rising share of the total is partly attributable to net decommissioning of fossil fuel power generation in Europe, North America and for the first time across Eurasia (Armenia, Azerbaijan, Georgia, Russian Federation and Turkey). Total fossil fuel additions fell to 60 GW in 2020 from 64 GW the previous year highlighting a continued downward trend of fossil fuel expansion.
“These numbers tell a remarkable story of resilience and hope. Despite the challenges and the uncertainty of 2020, renewable energy emerged as a source of undeniable optimism for a better, more equitable, resilient, clean and just future,” said IRENA Director-General Francesco La Camera. “The great reset offered a moment of reflection and chance to align our trajectory with the path to inclusive prosperity, and there are signs we are grasping it.
“Despite the difficult period, as we predicted, 2020 marks the start of the decade of renewables,” continued Mr. La Camera. “Costs are falling, clean tech markets are growing and never before have the benefits of the energy transition been so clear. This trend is unstoppable, but as the review of our World Energy Transition Outlook highlights, there is a huge amount to be done. Our 1.5 degree outlook shows significant planned energy investments must be redirected to support the transition if we are to achieve 2050 goals. In this critical decade of action, the international community must look to this trend as a source of inspiration to go further,” he concluded.
The 10.3 per cent rise in installed capacity represents expansion that beats long-term trends of more modest growth year on year. At the end of 2020, global renewable generation capacity amounted to 2 799 GW with hydropower still accounting for the largest share (1 211 GW) although solar and wind are catching up fast. The two variable sources of renewables dominated capacity expansion in 2020 with 127 GW and 111 GW of new installations for solar and wind respectively.
China and the United States were the two outstanding growth markets from 2020. China, already the world’s largest market for renewables added 136 GW last year with the bulk coming from 72 GW of wind and 49 GW of solar. The United States installed 29 GW of renewables last year, nearly 80 per cent more than in 2019, including 15 GW of solar and around 14 GW of wind. Africa continued to expand steadily with an increase of 2.6 GW, slightly more than in 2019, while Oceania remained the fastest growing region (+18.4%), although its share of global capacity is small and almost all expansion occurred in Australia.
Highlights by technology:
- Hydropower: Growth in hydro recovered in 2020, with the commissioning of several large projects delayed in 2019. China added 12 GW of capacity, followed by Turkey with 2.5 GW.
- Wind energy: Wind expansion almost doubled in 2020 compared to 2019 (111 GW compared to 58 GW last year). China added 72 GW of new capacity, followed by the United States (14 GW). Ten other countries increased wind capacity by more than 1 GW in 2020. Offshore wind increased to reach around 5% of total wind capacity in 2020.
- Solar energy: Total solar capacity has now reached about the same level as wind capacity thanks largely to expansion in Asia (78 GW) in 2020. Major capacity increases in China (49 GW) and Viet Nam (11 GW). Japan also added over 5 GW and India and Republic of Korea both expanded solar capacity by more than 4 GW. The United States added 15 GW.
- Bioenergy: Net capacity expansion fell by half in 2020 (2.5 GW compared to 6.4 GW in 2019). Bioenergy capacity in China expanded by over 2 GW. Europe the only other region with significant expansion in 2020, adding 1.2 GW of bioenergy capacity, a similar to 2019.
- Geothermal energy: Very little capacity added in 2020. Turkey increased capacity by 99 MW and small expansions occurred in New Zealand, the United States and Italy.
- Off-grid electricity: Off-grid capacity grew by 365 MW in 2020 (2%) to reach 10.6 GW. Solar expanded by 250 MW to reach 4.3 GW and hydro remained almost unchanged at about 1.8 GW.
This is an important press release which reminds us this is a critical decade if we are to slowly transition to a carbon neutral economy.
It also shows you where tangible progress is being made and Asia is taking the lead (maybe CPP Investments will expand its renewables platform there if they find the right group to partner with).
But I caution my readers, renewable energy isn't taking over conventional energy any time soon, we need to be patient and our large pensions need to remain actively engaged with conventional carbon based energy companies.
There simply is no way around this and CPP Investments is right to create a group that will look at investment opportunities across the energy spectrum.
Below, Deborah Orida, senior managing director and head of real assets of CPP
Investments, joins BNN Bloomberg to discuss the pension's interest in
renewables and clean energy as they create the Sustainable Energy Group.
She says they are investing around the world and that they are well
positioned for the consolidation in the conventional energy space. Watch it here if it doesn't load below.
Also, despite COVID-19 pandemic, more than 260GW of renewable energy capacity added globally in 2020, beating previous record by almost 50%. More than 80 per cent of all new electricity capacity added in 2020 was renewable, with solar and wind accounting for 91 per cent of new installations.