Canada’s CPPIB Boosts Investment in Renewables 100-Fold Since 2016

November 11, 2019 | ESG and Sustainability

The Canada Pension Plan Investment Board’s (CPPIB) also more than doubled its renewable energy investments last year.

As of June 30, the CPPIB revealed it had $3.02 billion invested in renewable energy businesses. This amount is twice what it was last year. It’s also more than 100 times the amount it invested in the renewables space in 2016.

CPPIB – Climate change leader

“Over the past year, we advanced our goal to be a leader among asset owners in understanding the risks posed and opportunities presented by climate change,” the fund said.

CPPIB simultaneously released its “2019 Sustainable Investing Report.”

The fund’s focus areas are climate change, water, human rights, executive compensation, and board effectiveness.

It was the world’s first pension fund to issue green bonds in 2018. In 2019, it issued its first euro-denominated green bond.

CPPIB – Renewable investing – global

According to Martin Laguerre, Senior Principal, Power & Renewables group, three key trends are working in renewables.

  • Renewable energy markets are growing well globally and are being adopted widely. They also now attract a different cost of capital.
  • There are opportunities to buy good projects and quality companies. These businesses are competitive and do not need subsidies, such as in the past.
  • Due to transparent pricing, large utilities are bidding at auctions on the prospect of earning attractive risk-adjusted returns.

CPPIB – Renewable investing – Europe

Bill Rogers, Senior Principal, Power & Renewables group, had the following comments about Europe, the most matured renewable energy market in the world.

  • Size of market stabilizing at US$80 – US$100 billion worth of investments annually.
  • Supportive regulatory frameworks pan-European-wide, and now in the UK
  • Falling costs – Solar costs have dropped over 90% since 2010, and, similarly, the cost of wind energy generated has dropped by more than 50% over the same period.
  • In wind energy, the latest turbines can generate energy at very competitive costs. This trend can open up a market valued at nearly US$500 billion over the next 10-15 years.
  • CPPIB is preparing to enter this market by entering a [50:50] partnership with Enbridge.

CPPIB – statistics

  • Fund value: $392 billion
  • Cumulative net income after all costs: $247.6 billion
  • 10-year net nominal annualized rate of return: 11.1%
  • 5-year net nominal annualized rate of return: 10.7%

[Related Story:  CPPIB to Buy Pattern Energy Group for $2.63 Billion ]

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