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Dutch pension investment giant APG ready to look at offshore wind opportunities

Initially sceptical investor has found a better way of calculating the risks

APG, the Dutch pension investor with €359bn in assets, has overcome its reluctance to investing in offshore wind and says it’s currently looking at several investment opportunities in the sector, including the proposed 700MW Borssele park off the coast of the Dutch province of Zeeland.

Last June, APG, which invests around €300bn for Dutch civil service scheme ABP, said it that while it wanted to support renewables, it was not keen on offshore wind owing to the risks associated with it being an unproven technology and also supported by subsidies.

Indeed, a month later, APG committed €250m to a fund operated by Germany’s Aquila Capital that invests in hydropower plants across Europe. “Hydropower ticks the right boxes for us in terms of the risk-return profile, the high cash-flow visibility and sustainability,” Patrick Kanters, APG Managing Director for Infrastructure, said at the time. Kanters noted that hydropower plants have an efficiency ratio of 95% compared with 50% for wind power facilities and 20% for solar ones.

However, APG now says Kanters’ team has decided to take another look at offshore wind as it has found a better way of calculating the risks linked to the sector. “This new approach followed talks between us and other investors as well as energy companies that have more experience with offshore wind,” said APG spokesman Harmen Geers.“As a result, we are now ready to look at opportunities in the Netherlands, Germany and the UK.”

PGGM, another big Dutch pension investor (€200bn in assets), has invested an offshore UK wind park, namely the 750MW Walney facility off the Cumbrian coast in the Irish Sea.

“We are now ready to look at opportunities in the Netherlands, Germany and the UK.”

Several wind parks are also under construction off Germany’s northern coasts as a result of the Energiewende, or the embrace of renewable power. By 2020, the German government expects 6GW of offshore wind capacity to be installed.

According to Geers, if APG invests in an offshore wind park, the commitment would be most likely “in the several hundreds of millions of euros.” Regarding Borssele, Geers said APG was going to take a good and serious look at it, adding, though, that the project was still very much in the early stages. According to press reports, construction of Borssele is to begin in October.

On behalf of ABP, the asset manager APG is planning to double its investments in renewable energy to €2bn by 2018. According to Dutch news reports, the government aims to have renewables account for 14% of energy consumption by 2022 against 5% currently.