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Lancashire County Pension Fund buys first direct wind farm stake

Lancashire County Pension Fund (LCPF) has committed to its first direct wind farm investment, a significant minority equity stake in EDF Energies Nouvelles’ (EDF EN) Portuguese wind assets.

The assets consist of interests in eight onshore wind farms in Northern Portugal with a gross capacity of around 500MW, ranking among the top five wind platforms in Portugal.

Mike Jensen, CIO at LCPF, told IPE: “An investment in wind farms provides the fund with a long-term income stream likely to grow with inflation.

“Portugal is an attractive location for wind farm installations, having a windy terrain, a stable feed-in-tariff regime and the support of local communities.”

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The feed-in tariff is for 15 years from the commissioning date, followed by a floor and cap-price mechanism for 5-7 additional years.

“EDF EN is at the forefront of developing new renewable energy projects and markets,” Jensen said.

“It will be a strategic long-term partner providing technical expertise and opportunities for the fund. EDF EN Portugal has a very enthusiastic and professional management team, which the fund is proud to be partnered with.”

LCPF already owns stakes in infrastructure funds with some wind farm exposure.

These include an investment in a 101 MW portfolio of landfill gas and coal mine methane electricity generation sites, and in two biomass power stations with a combined capacity of 68 MW. 

The fund has also provided £12m (€16.3m) to finance the Westmill Solar Cooperative, the first community-owned solar farm in the UK.

LCPF does not identify renewables separately within its portfolio, although 12.5% of assets have been allocated to infrastructure, which includes a large element of renewables.

These are seen as offering attractive long-term income returns.

Jensen said the new investment was expected to provide long-term cash yields that exceeded its benchmark for infrastructure, which it said had been one of its best-performing investment allocations.

For the year to 31 March, LCPF returned 14.9%, with an average portfolio value over the final quarter of £5.6bn.

The fund has the capacity to add a small number of similarly sized direct or partnership investments to the infrastructure portfolio.

Jensen said that, following the pooling of assets with the London Pensions Fund Authority, the pooled vehicle was likely to seek further such investments.

Santander Corporate & Investment Banking (France & Portugal) and Uría Menéndez-Proença De Carvalho advised LCPF.

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