CIP’s Energy Transition Fund reaches first close with EUR 800 million in commitments

Copenhagen Infrastructure Partners (CIP) reaches EUR 800 million first close on its new fund, CI Energy Transition Fund I (CI ETF I), with a target fund size of EUR 2.25 billion. The fund will invest in next generation renewable energy infrastructure including industrial scale Power-to-X (PtX) projects and enables institutional investors to participate in the decarbonization of the so-called hard to abate industries such as shipping, steel production, and agriculture through the use of green fuels and feedstock and CO2-free fertilizers. The fund will primarily focus on greenfield projects in Western Europe, North America, Australia and developed Asian countries. Besides PtX the fund may invest in advanced biofuels, carbon capture and utilization/storage (CCU/S), and other infrastructure technologies, applications, and solutions to decarbonize industries and transportation.

“CI ETF I is a significant step in CIP’s continued expansion as it broadens our offering to also include infrastructure funds targeted at decarbonizing the hard to abate sectors through CO2-free green fuels and feedstock. Solutions such as Power-to-X are key for countries and industries to take the next big leap within the decarbonization and reach the commitments of the Paris agreement. Obtaining first close commitments of EUR 800 million from existing investors is an important proof of investor confidence in CIP’s approach to energy infrastructure investments and a testament to the track record built with CIP’s renewables focused funds,” says Jakob Baruël Poulsen, Managing Partner in CIP.

CIP’s existing funds, including the recent EUR 7 billion CI IV, primarily focus on renewable energy infrastructure such as offshore wind, onshore wind, solar PV, transmission, hydro pumped store, and energy-from-waste, which decarbonize the power sector and provide cost competitive electricity. Next generation renewable energy infrastructure assets and applications, such as PtX, have now become relevant investment opportunities at industrial scale due to continued technological progress and cost improvements as well as recent implementation of regulatory frameworks and CO2 commitments by countries and large corporations with an ambition to achieve net-zero economies and companies over the next decades. PtX can decarbonize hard to abate sectors and supports the further integration of renewable power generation in the energy mix through grid balancing. As an industry pioneer and one of the global market leaders in greenfield renewable infrastructure investments, CIP is uniquely positioned to invest in next generation renewables and continue to take a key role in the energy transition.

Prior to first close of CI ETF I CIP has secured the fund an attractive portfolio of industrial scale development stage PtX projects with diverse exposure to production technologies and offtake markets. The projects, which are located in Western Europe (Denmark, Sweden, Norway, Spain) and Australia, are expected to produce green hydrogen, green ammonia, and green methanol.

The Australian PtX project, Murchison, was announced in November 2020 and will, once operational, export green ammonia to countries such as Japan, South Korea, and Taiwan. The Danish project, Høst, was announced in February this year. It will be a 1GW electrolysis plant located on the west coast of Jutland and source power from North Sea offshore wind turbines to produce green ammonia, which is expected to be used as feedstock for CO2-free fertilizer for the agriculture business and as green fuel for the shipping industry. The excess heat will be used to provide CO2 free heating for around 50.000 households in the town of Esbjerg.

The carbon free alternatives to fossil-based feedstock and fuels have immediate and significant impact on CO2 emissions. Green ammonia used as fertilizer is expected to reduce annual emissions by 2.5 tons of CO2 per ton of ammonia, which for the Danish project Høst will amount to an annual reduction of up to 1.5 million tons of CO2 once operational – or the equivalent to removing 730,000 cars from the roads permanently. The green ammonia produced by the Australian Murchison plant has the potential to reduce annual emissions by up to 4.4 million tons of CO2.

CI ETF I will apply the same and proven value creation and de-risking approach as CIP’s existing funds, i.e. the fund will engage with infrastructure projects prior to start of construction and apply CIP’s industrial skills to optimize and de-risk projects and investments through among others project design, partner selection, and contracting. Once de-risked the projects are expected to have core infrastructure characteristics including long term offtake contracts. The fund has the ability to hold projects and investments for the long term.

The new fund reached a first close of EUR 800 million on June 28, 2021 with capital commitments from a group of leading institutional investors, endowments, and family offices from Denmark, Sweden, and Germany including the two Danish pension funds PensionDanmark and PFA. Vestas and CIP have also committed to the fund.

“Power-to-X and other next generation renewable technologies and applications represent a significant and attractive new chapter for investors in large scale decarbonizing infrastructure. With PensionDanmark’s investment in CIP’s Energy Transition Fund we directly participate in the next phase of the energy transition and contribute with private capital facilitating industrial corporates and countries reaching their net-zero commitments. This is a natural step for us at PensionDanmark. More than 10 years ago we were a first mover into offshore wind infrastructure, and we are excited about the opportunity to continue investing with CIP at the forefront of the energy infrastructure market,” says Torben Möger Pedersen, CEO at PensionDanmark.

”Over the last 12-18 months, the interest in the development of next generation renewable energy and storage technologies has surged and reduction of GHG-emissions is a top priority on the political agenda worldwide. Combined with considerable market demand, this creates a series of investable opportunities and a window of opportunity for institutional investors such as PFA. Our investment in CIP’s Energy Transition Fund is a natural next step in our ongoing efforts to decarbonize our portfolio and participate in the green transition of our society. It is also a great opportunity to strengthen our partnership with CIP, a market leader within renewable energy that has consistently delivered strong performance in terms of risk-adjusted returns”, says Kasper Ahrndt Lorenzen, Group CIO at PFA Pension.

Following first close of CI ETF I, CIP has eight funds under management with total commitments of around EUR 16 billion. The CI ETF I fund will primarily be marketed to existing investors in CIP’s funds from across the Nordics, Europe, North America, Asia, and Australia and is expected to reach final close during the next nine months.

Law firms Plesner and Clifford Chance act as legal counsel, and KPMG Acor Tax as tax counsel.

About Copenhagen Infrastructure Partners

Copenhagen Infrastructure Partners P/S (CIP) is a fund management company focused on energy infrastructure including offshore wind, onshore wind, solar PV, biomass and energy-from-waste, transmission and distribution, re-serve capacity and storage, and other energy assets like Power-to-X. CIP has approximately 195 employees and offices in Copenhagen, Hamburg, New York, Tokyo, Utrecht, and London.

CIP manages eight funds and has approximately EUR 16 billion under management. PensionDanmark was founding and sole investor in CI I and CI A I. Today CIP’s funds have approximately 100 international institutional investors from the Nordics, Continental Europe, the UK, Israel, Asia, Australia, and North America and multi-lateral organizations e.g. EIB. CIP was founded in 2012 by senior executives from the energy industry in cooperation with PensionDanmark.

CIP was founded in 2012 by senior executives from the energy industry in cooperation with PensionDanmark.

For further information, please contact: Copenhagen Infrastructure Partners – Partner Steen Lønberg Jørgensen (via Kelly Bork on +45 7070 5151 or e-mail ir@cip.dk)