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Canada Pension Plan Investment Board has formed a new company to boost its European investments in renewable energy.

Renewable Power Capital Ltd. says it will invest in solar, onshore wind and battery storage, among other things, and has a target investment size of $100-million to $500-million a deal. The new venture is designed to kick-start CPPIB’s renewable-energy investments in Europe, which have been largely limited to a 2019 joint venture with Enbridge Inc. called Maple Power to invest in offshore wind projects.

Bruce Hogg, CPPIB’s head of power and renewables, says the company has identified a number of projects and hopes to make its first investment in early 2021. CPPIB will be the majority owner of the company, with Renewable Power Capital’s new management also holding an equity stake. Three of its top five leaders, including chief executive Bob Psaradellis, are alumni of General Electric Co., which has a sizable European energy business.

“Our [renewables] program has been in place for just under three years, and we’ve been quite busy building up from scratch to a global business,” Mr. Hogg said in an interview. “I would hope that we’d expect to invest over a billion dollars in this platform. But it’ll be a function of what the team can find. And we’re not in a hurry – if we can find great investment opportunities, they’ll grow faster. If [the team] can’t, they’ll be measured, and pick their battles.”

CPPIB has a mix of conventional energy and renewables investments, with the renewables segment growing each year. It had just less than $9-billion of equity commitments to renewable energy at the end of September, up from $6.6-billion at June 30 and from just $67-million as of June 30, 2017. Meanwhile, CPPIB’s exposure to fossil fuel producers, oilfield services providers and pipelines has ranged between $12-billion and $15-billion at the end of the past three fiscal years. CPPIB managed $456.7-billion in assets at Sept. 30.

Some of CPPIB’s other renewables ventures include wholly owned Cordelio Power, which manages wind and solar projects in Ontario and just partnered with a California company to do work in the western United States; and Pattern Energy Group LP, a wind-power company CPPIB bought in November, 2019, for US$2.6-billion plus debt.

Mr. Hogg said Renewable Power Capital is willing to invest in renewables businesses that have not already signed long-term contracts to sell their energy to customers, which allows it to step in at an earlier, more risky stage of the business than other investors might. That points to it starting in Spain and the Nordic countries such as Denmark, Finland, Norway and Sweden, mature markets where the assurance of a long-term contract plays less of a role in the markets, Mr. Hogg said.

And as a pension fund, it’s a long-term investor, with the ability to hold its stake for 20 years or more, Mr. Hogg said. “People that have the combination of our flexibility in terms of how we provide the capital, the expertise of the team and also the willingness to hold these projects for longer, that’s actually a relatively unique combination.”

That said, institutional investors in both the public and private sectors, with their deep pockets and long horizons, have been piling into the renewable-energy sector, some for quite a while.

Ontario Teachers’ Pension Plan has been investing in renewables since 2010 and has a dedicated “Greenfield & Renewables” investment team. In 2015, it joined with the Canadian federal employees’ pension manager, PSP Investments, to form Cubico Sustainable Investments Holdings Ltd. The Ontario Municipal Employees Retirement System bought Texas-based wind-farm operator Leeward Renewable Energy LLC in 2018. And renewable energy makes up about one-quarter of a $30-billion infrastructure portfolio at Caisse de dépôt et placement du Québec, where its first infrastructure equity investment in Spain will form the basis of a new renewable-energy platform in that country.

In the private sector, Toronto’s Brookfield Asset Management Inc. is one of the world’s biggest owners of renewables, with US$52-billion in assets after 25 years of investment. It has a spinoff company, Brookfield Renewable Partners LP, dedicated to the sector.

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