While societal, political and corporate pressure continue to push innovation on renewable energy, the world's largest wealth fund is apparently having trouble identifying good investment deals in the sector.
Norway's $1.1 trillion sovereign wealth fund, the world's largest, is having trouble finding suitable unlisted renewable- energy projects to invest in due to the paucity of projects and strong competition for stakes in them, its new CEO said.
Such investments are new for the fund which, until this year, was only allowed to invest in stocks, bonds and real estate.
"In our experience so far, there are many investors looking for these investments and pricing is thus not always as attractive for us," the fund's new CEO, Nicolai Tangen, told a parliamentary hearing on Friday.
"These investments are subject to the same risk and return requirements as the (fund's) other investments. In the near term, finding projects that meet these requirements may be demanding."
In March, the fund said it was looking to invest some 100 billion crowns ($10.83 billion) between 2020 and 2022 in unlisted renewable projects such as wind parks and solar farms, looking first at North America and Europe.
That remains the strategy, Tangen said on Friday, though there were relatively few projects available.
"They are few and they are big. It is difficult to know when they are coming...There is a lot of competition for these projects," he told the hearing.
Tangen said later the fund "had not given up" and was working intensely on making those investments happen.
Asked by a lawmaker whether the fund could look to emerging markets to make those investments instead, Tangen said that "could create even bigger regulatory challenges.
"It is important to say that we have not at all given up on making those investments in North America and Europe. We are working hard on this to make it happen."
A five-member team at the fund is looking at these investments, headed by Chief Real Assets Officer Mie Holstad.
The fund was allowed to invest in the assets after extensive discussions among Norwegian politicians about the suitability of the fund to invest in unlisted assets.
(Editing by Larry King and Mark Heinrich)
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