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IPE special report May 2018

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PensionDanmark welcomes launch of DKK5bn green investment fund

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A DKK5bn (€670m) green investment fund to be launched by the Danish government has been welcomed by one of the country’s largest pension funds for granting institutions access to small-scale green projects.

Torben Möger Pedersen, chief executive of the DKK152bn PensionDanmark, said he was prepared to invest if the projects offered an attractive risk/return profile.

The government will initially offer loan guarantees totalling DKK2bn, although the guarantee could be expanded to up to DKK5bn, the Danish Ministry of Finance said.

The fund will offer loans to private companies, non-profit housing associations and a limited number of government institutions that wish to address the energy consumption of production facilities and reduce the energy footprint of a building through changes to lighting, heating and ventilation systems.

Additionally, loans will be available for resource-efficiency projects such as reduction of water use and the installation of heat pumps and wind turbines. 

Bjarne Corydon, finance minister and a member of prime minister Helle Thorning-Schmidt’s social democratic party, said the fund would give Denmark a “green injection”.

“It will not only benefit the environment – it will also strengthen our industry leadership in environment and climate, and thus result in green jobs and new export opportunities,” he said.

The government will supply an initial DKK80m to finance the start-up costs of the green investment fund until 2016.

Möger Pedersen told IPE he welcomed the launch of the fund.

“It gives us an opportunity to get invested in energy projects in smaller companies that can supplement our direct investments in large energy infrastructure assets,” he said.

“So, if we can find the right balance between return and risk, we are ready to invest.”

PensionDanmark has in the past been active in the renewables market, partially growing its infrastructure portfolio through the acquisition of stakes in wind farms.

Last December, it acquired a 49% stake in a UK wind farm for £153m (€185m).

It is not the first time the Danish government has offered loan guarantees to underwrite a fund aimed at pension investors.

In 2011, the country’s export credit agency (EKF) launched a fund to lend to foreign companies placing orders with Danish businesses.

At the time, PensionDamark committed €1.3bn to the fund.

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