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Danish pension funds invest in UK biomass power plant

A group of Danish pension funds has bought a biomass-fired power plant project in the north of England for DKK1.6bn (€215m) via investment fund Copenhagen Infrastructure II.

The fund, run by Copenhagen Infrastructure Partners (CIP), has labour-market pension funds PensionDanmark, Lægernes Pensionskasse, PBU, JØP and DIP as investors, as well as commercial pension providers Nordea, PFA, AP Pension and SEB.

Danish financial group Nykredit is also an investor in the fund.

Christian Skakkebæk, senior partner at CIP, said: “The Brite project is an attractive investment opportunity for CIP in a country with a well-established and stable regulatory regime.”

He said the deal fit in very well with the firm’s strategy of developing projects that benefit from long-term contracts with strong industrial partners in order to give investors stable returns.

PensionDanmark has committed DKK3.5bn to the fund out of a total of more than DKK8bn in commitments the fund has received so far from the 10 institutional investors.

The fund is still open for commitments until the end of the first quarter of this year.

The Brite power plant is located in Rotherham near Sheffield and will be fuelled with waste wood from the local area, sourced from a long-term contract with Stobart Biomass Group.

It is expected to be completed in the spring of 2017, and will have a capacity of 39.3 MW.

The plant will be built by a consortium consisting of Babcock & Wilcox Vølund, which is based in the Danish town of Esbjerg, and UK firm Interserve. 

On completion, Babcock & Wilcox Vølund will be responsible for operating and maintaining the installation on a 15 to 20-year contract.

For PensionDanmark, the Brite power plant will be the third biomass facility in England the pension fund has invested in.

It was involved in establishing the Brigg and Snetterton biomass-fired plants via a joint venture between the Copenhagen Infrastructure I fund – in which PensionDanmark is sole investor – and Burmeister & Wain Scandinavian Contractor (BWSC).

Torben Möger Pedersen, PensionDanmark’s managing director, said he saw great potential in the type of partnership that was behind the three investments.

“Investments in the three British power plants with competent industrial partners like BWSC and now Babcock & Wilcox Vølund ensure members a good return over many years and at the same time contribute to strengthening Danish energy technology exports,” he said.

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