Copenhagen Infrastructure Partners (CIP) reaches €800 million first close on its new fund, CI Energy Transition Fund I (CI ETF I), with a target fund size of €2.25 billion. The fund will invest in next generation renewable energy infrastructure including industrial scale Power-to-X (PtX) projects and enables institutional investors to participate in the decarbonisation of the so-called hard to abate industries such as shipping, steel production, and agriculture through the use of green fuels and feedstock and CO2-free fertilizers.
The fund will primarily focus on greenfield projects in Western Europe, North America, Australia and developed Asian countries. Besides PtX the fund may invest in advanced biofuels, carbon capture and utilisation and storage (CCUS), and other infrastructure technologies, applications, and solutions to decarbonise industries and transportation.
CIP’s existing funds, including the recent €7 billion CI IV, primarily focus on renewable energy infrastructure such as offshore wind, onshore wind, solar photovoltaic (PV), transmission, hydro pumped store, and energy-from-waste, which decarbonise the power sector and provide cost competitive electricity. Next generation renewable energy infrastructure assets and applications, such as PtX, have now become relevant investment opportunities at industrial scale due to continued technological progress and cost improvements as well as recent implementation of regulatory frameworks and CO2 commitments by countries and large corporations with an ambition to achieve net-zero economies and companies over the next decades. PtX can decarbonise hard to abate sectors and supports the further integration of renewable power generation in the energy mix through grid balancing. As an industry pioneer and one of the global market leaders in greenfield renewable infrastructure investments, CIP is uniquely positioned to invest in next generation renewables and continue to take a key role in the energy transition.
Prior to first close of CI ETF I, CIP has secured the fund an attractive portfolio of industrial scale development stage PtX projects with diverse exposure to production technologies and offtake markets. The projects, which are located in Western Europe (Denmark, Sweden, Norway, Spain) and Australia, are expected to produce green hydrogen, green ammonia, and green methanol.
The Australian PtX project, Murchison, was announced in November 2020 and will, once operational, export green ammonia to countries such as Japan, South Korea, and Taiwan. The Danish project, Høst, was announced in February 2021. It will be a 1 GW electrolysis plant located on the west coast of Jutland and source power from North Sea offshore wind turbines to produce green ammonia, which is expected to be used as feedstock for CO2-free fertilizer for the agriculture business and as green fuel for the shipping industry. The excess heat will be used to provide CO2 free heating for approximately 50 000 households in the town of Esbjerg.
The carbon free alternatives to fossil-based feedstock and fuels have immediate and significant impact on CO2 emissions. Green ammonia used as fertilizer is expected to reduce emissions by 2.5 tpy of CO2 per t of ammonia, which for the Danish project Høst will amount to an annual reduction of up to 1.5 million t of CO2 once operational – or the equivalent to removing 730 000 cars from the roads permanently. The green ammonia produced by the Australian Murchison plant has the potential to reduce annual emissions by up to 4.4 million t of CO2.
CI ETF I will apply the same and proven value creation and de-risking approach as CIP’s existing funds, i.e. the fund will engage with infrastructure projects prior to start of construction and apply CIP’s industrial skills to optimise and de-risk projects and investments through among others project design, partner selection, and contracting. Once de-risked, the projects are expected to have core infrastructure characteristics including long term offtake contracts. The fund has the ability to hold projects and investments for the long-term.
The new fund reached a first close of €800 million on 28 June 2021 with capital commitments from a group of leading institutional investors, endowments, and family offices from Denmark, Sweden, and Germany including the two Danish pension funds PensionDanmark and PFA. Vestas and CIP have also committed to the fund.
Following first close of CI ETF I, CIP has eight funds under management with total commitments of approximately €16 billion. The CI ETF I fund will primarily be marketed to existing investors in CIP’s funds from across the Nordics, Europe, North America, Asia, and Australia and is expected to reach final close during the next nine months.
Law firms Plesner and Clifford Chance act as legal counsel, and KPMG Acor Tax as tax counsel.
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