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sts.components.contact.mr.placeholder Sebastian Webel
Mr. Sebastian Webel

Editor-in-Chief

Tel: +49 (89) 636-32221

Fax: +49 89 636-35292

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Pictures of the Future
The Magazine for Research and Innovation
 

Project Finance for Infrastructures

Interview: Henrik Poulsen, CEO, DONG Energy

Why Danish Pension Funds Are Investing in Wind Farms – and How this Boosts their Income

DONG Energy is a large Danish energy company and one of the most important developers of offshore wind farms in Europe. In addition, it produces, procures, trades and distributes energy in Northern Europe. Numerous pension funds from both Denmark and abroad have invested in wind farm projects of DONG.

Since interest rates have been at historic lows over the last few years, the yield on government bonds and other so-called low-risk investments, traditionally bought by pension funds, has decreased significantly. The result has been depressed returns on funds. Returns on wind farms, similar to other investments in large infrastructure projects, may provide more attractive returns. Funds that have invested in such assets have been able to boost their yield, thus improving the expected income of many pensioners in decades to come.

New sources of capital

These trends are helping DONG Energy to develop wind farms faster, since the company has increasingly been able to tap into new sources of capital. In order to mitigate technological risks, which could depress the financial returns of its wind projects, DONG Energy needs reliable suppliers.

One of the company’s major long-term partners is Siemens, which has supplied DONG with more than 900 offshore wind turbines that have a combined capacity of 2,700 megawatts. More projects are under contract and will be installed in the upcoming years. Siemens also invested in some of these very projects, through its financing arm, Siemens Financial Services (SFS). SFS has, for example, invested more than EUR 100mn in equity in the offshore wind project Lincs in the UK.

 

Text and Interview: Andreas Kleinschmidt