Norway’s GPFG Autonomous Fund to Capitalize $14 Billion in Unlisted Renewables

Norway’s sovereign wealth fund, the Government Pension Fund Global (GPFG) has announced that it will soon be able to invest in unlisted renewable energy infrastructure projects, such as wind power plants and solar parks after the Norwegian government approved the move under dedicated environmental mandates.

“The Government is now allowing for the Government Pension Fund Global to be invested in unlisted renewable energy infrastructure. The investments shall be made within the scope of the special environment-related mandates only. The upper limit on such investments will be doubled, from NOK 60-120 billion ($7-14 billion),” the Government issued in a statement.

“The Government is allowing for the Government Pension Fund Global to be invested in unlisted renewable energy infrastructure under the dedicated environmental mandates. Such investments shall be subject to the same profitability and transparency requirements as the other investments of the Fund,” said Siv Jensen, Minister of Finance.

“Allowing for unlisted renewable energy infrastructure is not a climate policy measure, but is a part of the investment strategy for the Fund. These investments shall be subject to the same profitability and transparency requirements as the other investments of the Fund. We are not stipulating that the Fund shall be invested in unlisted renewable energy infrastructure, but are enabling Norges Bank to make such investments if deemed profitable,” he added.

Such investments will form part of the Norges Bank’s active management and will draw on the scope for deviations from the benchmark index, which is to remain unchanged. In addition, the introduction of a separate upper cap on unlisted renewable energy infrastructure investments, at 2 percent of the Fund, is proposed in order to limit risk.

Norges Bank has stated that it will proceed with caution and start out by considering investments with partners in developed markets, and in projects with relatively low operational and market risk.

IEEFA Finance Director Tom Sanzillo said, “After a three-year diligence process the Government Pension Fund Global has confirmed that investments in unlisted renewable energy have a sound cash position, healthy exit strategies and a positive outlook. This is a growth industry. Investments by the fund now allow it to take advantage of this growth and to use its resources to develop the market for decades. Moreover, Norway will tighten its coal criteria which will lead to the divestment of large mines and coal-exposed power companies. This is a strong step for the health of the Fund and the planet.”