Clean Power

Published on December 24th, 2014 | by Joshua S Hill

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Canadian Pension Funds To Invest In Renewables To The Tune Of $2 Billion

December 24th, 2014 by  


Two Canadian pension funds have announced an agreement with Spanish banking giant Banco Santander to jointly acquire a portfolio of renewable energy and water infrastructure assets which is valued at over $2 billion.

solar-power-wind-power-clean-energy-private-equity-investment-firm-moneyThe pension funds, Ontario Teachers’ Pension Plan and the Public Sector Pension Investment Board (PSP Investments) will expect to see the transaction closed sometime in the first half of 2015, and in conjunction with Santander intend to invest “significant additional amounts” over the next five years.

A new company will take ownership of the assets, and be equally owned by all three parties.

“Over the last seven years in Santander, the business has become one of the leading developers of renewables projects around the world, having invested over US$2 billion in renewable energy and water projects,” said Marcos Sebares, CEO of the new entity, who will head up an experienced team (presumably to counter his youth).

“A combination of Santander, which has consistently been voted the greenest bank in the world, and two investors, such as PSP Investments and Teachers’, who have a long history of sustainable investing, marks the beginning of a new phase in the development of our company into one of the world’s leading renewable energy investment companies. We have a strong balance sheet and long term investment strategy, with a mandate from shareholders to grow the new company over the next five years.”

The only indication of the exact nature of the assets comes from the Ontario Teachers’ Pension Plan press release announcing the venture. The portfolio of assets includes wind, solar, and water infrastructure assets across seven different countries that are currently operating, or in development.

“We are excited about partnering with Santander and PSP Investments and look forward to supporting management in growing this company significantly in the coming years,” said Andrew Claerhout, Senior Vice-President, Infrastructure at Teachers’. “This investment directly supports our focus on investing in platforms that provide access to development opportunities globally.”

“This investment fits well with our strategy of deploying capital in sizeable opportunities that offer long term revenues and growth potential along with solid partners,” said Bruno Guilmette, Senior Vice-President, Infrastructure Investments at PSP Investments. “It also allows PSP Investments to continue to develop its portfolio of private energy assets while contributing to environmentally sustainable energy production.”

Pension Funds Following Investment Trends

In my life, I would never have imagined myself so regularly writing the words “pension fund.” But in many respects, the conservative world of pension fund investing acts as a good barometer of the rest of the investing world.

Only last month, Norway’s biggest pension funds manager KLP announced that it was divesting entirely from coal energy. KLP, the pension fund for the country’s public sector employees, intends to redirect approximately $75 million into renewable energy companies.

“We are divesting our interests in coal companies in order to highlight the necessity of switching from fossil fuel to renewable energy,” stated KLP’s CEO Sverre Thorne. “We’re quite convinced that we will manage to deliver the same returns in the future without those from coal companies. We want our owners and customers to feel secure about that.”

Not long afterwards, Norway’s $870 billion sovereign wealth fund announced that the most harmful coal, oil, and gas investments would be assessed and excluded on a “case-by-case basis” — a strong statement that the country will not tolerate being party to environmentally devastating energy generating resources; but similarly making it clear that they will not be making ad-hoc sweeping changes based on morality.

Such a decision, according to a Bloomberg New Energy Finance analysis from August of this year, would globally cost upwards of $5 trillion.

This is not to say that investors are not taking an interest in so-called “ethical” investments — they are, and for good reason. There is a prevailing train of thought that fossil fuel assets could eventually become “stranded” by emission regulations, which is fuelling a trend towards fossil fuel divestment.

“The $5.5 trillion needed to build out clean energy through 2030 will offer many new opportunities for investors, but a major switch into that and out of fossil fuels would require a massive scale-up of new investment vehicles,” explained Nathaniel Bullard, author of the Bloomberg New Energy Finance analysis.

The problem facing investors looking to make ethical decisions is that “fossil fuels are investor favourites for a reason.” Bullard continued:

Very few other investments offer the scale, liquidity, growth, and yield of these century-old businesses with economy-wide demand for their products.

In the end, fossil fuel divestment will be a long-term strategy, not one that is hurried. As Siemens chief executive Roland Busch made clear in a speech earlier this year, coal is a necessary fuel at the moment.

“In the next ten to 20 years I can’t imagine running any economies without fossil fuel. Beyond 20 years, it’s very hard to say.”

So I suggest we revisit this discussion in 20 years. Join me?






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About the Author

I'm a Christian, a nerd, a geek, and I believe that we're pretty quickly directing planet-Earth into hell in a handbasket! I also write for Fantasy Book Review (.co.uk), and can be found writing articles for a variety of other sites. Check me out at about.me for more.



  • Thanks for this great article Joshua. However, I can’t agree with your suggestion to “… revisit this discussion in 20 years.” We need to revisit and expand this discussion daily, if we want to preserve a stable and liveable climate for our descendants.

  • Vensonata

    I’ve been reading the book “6000 years of solar”. Quite a history. Did you know Socrates was an advocate for proper solar house orientation? Anyway, it is amazing to see this competition between fuels going back commercially 200 years. Solar would come on strong only to be zapped by cheap coal or oil or gas. People had no commitment to anything but convenience and money. Whenever solar hot water was better, even in the 1900’s, people bought it. So now there are several factors in favor of the tide changing to solar and wind: its competitive, reliable, we know it works, and the biggest difference, the impossibility of continuing to burn fossil fuels because of warming. The number of factors seem overwhelming in the direction of renewables. The only question is… will we make it in time?

    • rockyredneck

      You are totally correct that people will only commit to convenience and money. For any action to be effective, this has to be the first consideration. If it is too costly or raises taxes unduly, no politician can survive by promoting it, and without wide public support, no argument will have any effect. Clean technology simply must be cost effective, and we have to concentrate our efforts on making it so.

  • Martin

    I do know that RE investments are good, but our politicians appear not to know or understand Yes, Canada has very good wind, as well as solar and geothermal and the longest coastline of all counties in the world (wave power) and the bay of Fundy has as much water movement, tidal action, as all steams and rivers on the planet combined.
    Any of these, by them self, could power all of our country, but political will is missing, big time!

    • rockyredneck

      If alternative energy is really more financially attractive, no politics is needed. If it is too financially unattractive, no political action will be supported by the voters. Wind, solar, tidal, geothermal, or hydro projects must stand on their own without undue political support. I think most can stand on their own , but It will take time to marshall the investment.

      • Bob_Wallace

        Do you think nuclear and fossil fuels should continue to receive taxpayer support after renewables no longer receive subsidies?

        Is it OK with you if the government continues to treat nuclear and fossil fuels as its favorite children?

        • Larmion

          We should be honest in our discussion though: not all support is a direct subsidy.

          Nuclear, for example, gets most of its support through things like loan and export guarantees. Those are often counted as subsidies by opponents, which is technically correct, but in practice only become a real subsidy should the project fail (which rarely happens).

          Similarly, many support measures for renewables are indirect subsidies (a renewable portfolio standard, for example, provides the same market incentives as a direct subsidy does) but are rarely counted as such by the same groups.

          Per unit of capacity, renewables receive more direct subsidies than their alternatives in most of the world. Even that figure hides a lot of variation: hydro often receives little subsidy, whereas solar still needs heavy subsidies.

          The support for renewables is not a bad thing per se: there are many reasons to favor renewable electricity over other energy sources, and the subsidies have succeeded in pushing previously expensive wind into the same price range as even the cheapest fossil fuels (and solar is slowly getting there). But that doesn’t distract from rocky’s points having at least some merit.

          • Bob_Wallace

            Seems that you are arguing that since nuclear received its heavy subsidies earlier that should be ignored and we should look only at the much more modest subsidies wind and solar have recently been receiving.

            BTW, the history of nuclear plant non-completion in the US is significant. A lot of plants were started and not completed. Some operated only a short amount of time before permanently closing. Investing in nuclear is very risky which is why private money won’t touch it unless governments accept the risk.

          • rockyredneck

            You can hardly expect to see large expenditures on subsidies to fledgling industries. I think you will see increases in the future.

          • Bob_Wallace

            I don’t know what Canada will do in the future but solar subsidies are dwindling in the US and Germany. Wind subsidies are likely to fall away soon.

          • rockyredneck

            It is hard to know the motivations in other countries. It may be that they subsidies are not seen as needed.

          • rockyredneck

            Certainly the non-completion of nuclear plants in the U.S. has been significant. The U.S. is fairly unique, in this respect. By bowing to activist pressure, more use of coal fired plants was probably encouraged .

          • Bob_Wallace

            Activists did not cause plant abandonment except in a small number of cases. Economics caused projects to be canceled.

            ” More than 60 proposed projects were scrapped in the 1970s and early 1980s as the energy environment changed and oil became cheaply available. The 1979 Three Mile Island partial meltdown added public fears about nuclear safety to the mix.”

            http://insideclimatenews.org/news/20100301/undoing-mothballs-long-abandoned-nuclear-reactors-eyed-restart

            What is not said here is that cost overruns became more and more common.

            By the time TMI happened nuclear reactor starts had ground to a stop. The ‘golden age’ of US nuclear power ended five years before TMI melted.

          • rockyredneck

            You do not quantify the reaction of governments to activism. How many subsidies, operating permits,and loan guarantees were refused because of the press created?

          • Bob_Wallace

            I don’t know. But the conversation was about US reactors which were started and never finished. I highly doubt a single permit, loan guarantee or subsidy was withdrawn from a reactor once construction started.

            Don’t lose sight of the main fact, Rocky, nuclear is very expensive. Nuclear hasn’t failed because of NIMBY objections, there are many places where people don’t oppose their construction. Reactors aren’t built because they are too expensive.

          • rockyredneck

            I am pretty neutral on the subject of nuclear generation but I am pretty certain there are or were instances where it would be the cheapest option. Obviously not where plentiful hydro is available to the grid. This link is interesting reading in that it relates some history of nuclear power.

            https://www.iaea.org/About/Policy/GC/GC48/Documents/gc48inf-4_ftn3.pdf

          • Bob_Wallace

            From your link –

            “But every turnkey plant lost its manufacturer money.”

            Your link makes a big deal about opposition and time to permit. All those canceled reactors had their permits, they started construction, costs spiraled far above what the builders claimed they would be, the projects were abandoned.

            There may be some places where nuclear is the cheapest option. Submarines that stay underwater for months come to mind….

          • rockyredneck

            Your picked comment has little to do with the cost of power produced. If anything it would lower the cost as some is being absorbed by the plant manufacturers. Needless to say it is likely why the Canadian manufacturer required so much in the way of subsidy. Probably, American manufacturers did not receive the same support.

          • Bob_Wallace

            The cost of building a nuclear plant has everything to do with the cost of the power produced.

            I found it interesting that companies underbid costs even in turnkey contracts.

            I don’t understand your last sentence. Reactors were abandoned because costs spiraled upwards. Reactors in the US received lots of subsidies. Over $185 billion so far.

          • rockyredneck

            Every industry experiences upward spiraling costs on long term projects, at some times, and for a variety of reasons.
            I am pretty certain it was not the reason for the end of new builds in the U.S. as it did not seem to have the same effect globally. It is almost certain that the slowdown in nuclear use in the world, then and now, is activist opposition and public fears. Although costs may be a factor I doubt that it is the deciding one.

          • Bob_Wallace

            Rocky, the world pretty much quit building reactors in 1989. At that point the number of reactors on line pretty much plateaued and is now on the down slope.

            China started a nuclear build program because they needed a lot of energy and they needed to deal with air pollution. They also had money to spend so paying extra for electricity in exchange for cleaner air was affordable.

            Now that renewables have become so inexpensive it will be interesting to watch decision going forward. Will China with its slowing economy continue to start construction on new reactors or spend their money on renewables and cut their coal use sooner?

          • rockyredneck

            It is going to be interesting, Let’s hope hope we live long enough to see some changes. If they are as many as we have seen in my 72 years, they are going to be tremendous.

          • Bob_Wallace

            Well, you’ve got a year’s longer perspective than I do. When I look back to the pre-jet, pre-computer, pre-so much stuff days it’s been a pretty wild ride. My father was born only five years after the Wright brothers first flew and in the year that Henry made the first Model T. He lived well past people walking on the Moon. The last ~ 100 years has seen incredible developments.

            From here on out progress should move faster. What we know now, our communication and computational tools, simply amazing.

          • rockyredneck

            I agree that changes should move faster. I am not at all sure that all will be considered progress.

          • Bob_Wallace

            Hindsight is a wonder tool that let’s us look back at mistakes. Too bad it doesn’t let us look into the future as well.

            We’ll make mistakes. But we’ll probably get more stuff right than we get wrong.

          • rockyredneck

            Let’s hope so.

          • rockyredneck

            The U.S. did not build any new nuclear plants from 1974 to 2012 according to any sources I have seen.

          • Bob_Wallace

            Comanche #1 and #2 were started in 1974. #1 came on line in 1990. #2 came on line in 1993.

            There were several other reactors which were completed and brought on line after 1974. Probably over 30.

          • rockyredneck

            sorry I i should have said started instead of built.

          • Bob_Wallace

            Are you referring to the yellow and brown graph I put up?

            That’s global, not just the US.

          • rockyredneck

            No, I understand that is global.

          • rockyredneck

            It is possible that some were canceled by the utilities in response to activist opposition.

          • Bob_Wallace

            It’s possible that some were canceled because someone put a voodoo curse on them.

            Not probable. Both cases.

        • rockyredneck

          Fossil fuels subsidies are being phased out in Canada and I don’t think they are necessary any longer. You can hardly blame a government from favoring an Industry that provides so many jobs and so much income to the governments. Subsidies have generated a tremendous return on investment.

          Nuclear power was used mostly in Ontario, a province that has closed its coal plants and encouraging wind. At least one nuclear plant has a second purpose to produce medical isotopes. My own feeling is that nuclear subsidies need to be considered on a case by case basis.

          The export of Candu reactors has been a source of foreign currency for Canada and the crown corporation that produces them has been the recipient of most of the federal subsidies. I don’t think this is a direct subsidy of electricity from nuclear generation, unless it is a subsidy to other countries enabling them to use a technology cleaner than coal.

          Finally I am not against subsidies to start up companies as a method of stimulating job growth and investment. I just don’t think there should be any direct subsidies for the product produced. I think wind, solar and other renewables would benefit greatly from that type of support as their operating costs should be very low.

          Merry Christmas Bob

          • Bob_Wallace

            I’m not willing to give Canada a pass on GHG emissions because it’s created jobs. Just like I’m not going to give bank robbers a pass because they made money.

            I can see an argument for basing subsidies on power produced rather than paying to help build the plants. When you subsidize production you’ve assured the power actually came on line.

          • rockyredneck

            Pretty hard for a politician to ignore jobs and government revenue. They are how they provide the public perks that keep them elected. Comparing a politician to a bank robber could be apt in some cases, however.

            Subsidizing production encourages use, which may make a product more competitive, but also may leave room for more of less desirable production.

          • Bob_Wallace

            Yes, politicians first job is to get elected. But that does not mean that they have to support very bad ideas when there are better options. Canada could put more people to work installing renewables.

            Subsidies on the front or rear end lower costs. Whether the proper things are being subsidized is a different issue.

  • Will E

    fossil prices high, cannot compete, fossil prices low, cannot produce.
    the problem fossil faces is competition. for a century fossil had no competition.
    oil is down now to 55 a barrel.
    but no fool will invest now in new coal nuke or diesel utility plants.
    Wind and Solar is clean cheap and easy.
    How long people will accept air pollution in the cities they live in?

    • Bob_Wallace

      ” no fool will invest now in new coal nuke or diesel utility plants.”

      Fools will.

  • Mike333

    1) Great News.
    2) Exxon alone should be investing 20 Billion yearly.

  • Martin

    Just wondering how much of those investments will be on Canadian soil ?

    • Mike333

      There’s a lot of wind potential in Canada.
      They could power their whole nation on wind alone.
      Secondly, wind energy has been 100% more profitable then previously projected. Wind turbines were modeled to be in utilization 20% of the time, real world statistics are bringing in utilization rates of 40%.

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