Allowing for unlisted renewable energy infrastructure

The market for renewable energy is growing rapidly. A major part of the renewable energy investment opportunities is found in the unlisted market, especially in unlisted infrastructure projects. Expectations of significant investments going forward mean that this market is of interest to institutional investors such as the Government Pension Fund Global.

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 to 120 billion.

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.

– The proposed regulation will enable Norges Bank to adopt a gradual approach in a relatively small market and to invest in a cost-effective manner, says Siv Jensen, Minister of Finance.

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.

– 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, says the Minister of Finance.