Canadian pension fund giant leads field in new American wind power

Canada Pension Plan Investment Board (CPPIB) will be the largest owner of planned US wind installations from 2023 through 2027 with about 15% of the country’s total project pipeline for that period, according to latest data from S&P Global Market Intelligence.

The Canadian crown corporation through its 100% ownership of Pattern Energy, based in San Francisco, has 7.03GW planned capacity, 2GW more than Orsted in the number two spot and about 2.2GW more than Apex Clean Energy in third place, the highest-ranking US player in S&P’s top 10 largest owners.

The analytics firm said its data shows that on 30 September, 41.1GW of wind capacity was planned for commercial operation in the five-year period through 2027, but no more than half will be offshore.

President Joe Biden has set a national target for 30GW of offshore wind capacity to be in commercial operation by 2030.

The wind pipeline was divided into projects that were announced, early development, advanced development, and under construction. Most offshore projects were in the categories of announced or early development.

S&P considers a project in advanced development as meeting two of five criteria: financing is in place, PPA agreements are signed, equipment is secured, required permits are approved, or a contractor has signed on to the project. A project is under construction when building activity has begun, not site preparation.

CPPIB’s position as the largest owner of planned wind installations underscores the growing role Canadian investment plays in driving energy transition in the US economy, the world’s largest at $26.9trn as measured by nominal GDP, according to the International Monetary Fund.

Investors include asset management, infrastructure and pension funds, and fossil energy and pipeline companies.

CPPIB, for example, invested $2.63bn in 2020 to fully acquire Pattern, a leading independent renewable energy project developer.

With the financial backing of its new parent, Pattern is advancing some of the largest US clean energy infrastructure projects including the 3.5GW SunZia wind farm in New Mexico and a related interstate export transmission line – a combined $9bn investment.

On 30 June, CPPIB managed C$575bn ($423bn) in assets for the Canada Pension Plan (CPP) on behalf of 21 million Canadians. It is not considered a sovereign wealth fund because it operates at arm’s length from the government of Canada and only manages CPP contributions paid by workers and employers, not public funds.

CPPIB has 36% of its asset portfolio in the US where the five-year average for annualised net returns was 9.8% in fiscal year 2023, by far the best performance for any country or region in the world.

The pace of Canadian capital flowing south into the US has accelerated since August last year after a landmark US climate law took effect, making available lucrative long-term federal tax credits for development of onshore and offshore wind, and other proven and experimental technologies across the clean energy spectrum.

Caisse de dépôt et placement du Québec (CDPQ), the second largest pension fund in Canada, is now majority owner of Invenergy Renewables, which is developing both onshore and offshore wind and solar projects.

S&P ranks Invenergy as number five among owners of planned US wind installations with 4.22GW through 2027.

S&P’s listing also highlights the continued importance of onshore wind in the US energy transition as CPPIB, Apex Clean Energy, and sixth ranking NextEra Energy Resources have no offshore wind projects in development. NextEra is the largest renewable energy developer and generator in the western world.