Susanna Twidale and Isla Bnnie

MADRID/LONDON – Major Canadian pension fund, Ontario Teachers’ Pension Plan, has committed to investing up to $1B in a new offshore business that is being launched by Australia’s Macquarie Group Ltd. The company said on Thursday.

As part of an international effort to decrease planet-warming carbon emission, the United States of America and Britain are placing a lot of wind turbines along the coasts.

Infrastructure funds and pension funds are often drawn to renewable energy projects because of the potential long-term returns. But it’s less common for them take the chance that projects have not been constructed or secured the right to purchase their power from the consumers.

A deal was struck with Macquarie’s new offshore wind developer Corio Generation. Ontario Teachers’ will make a total of $1 billion to develop 14 fixed-bottom or floating wind farms in South Korea. They are estimated at around 9 gigawatts each.

Chris Ireland, Ontario Teachers’ managing director for Greenfield Investments and Renewables told Reuters there were benefits to getting involved earlier along in the process.

He said, “It gives us access to great projects that we can invest for the long-term without having to compete with other investors.”

Canada’s most important pension plan, the Ontario Teachers’ Pension Program manages total assets in excess of $185 Billion.

There is a lot of demand for this sector, so there have been many high-priced deals in recent years. Equinor sold to BP (NYSE) a half stake in two U.S. Wind farms in 2020. This netted the Norwegian company a $1billion profit.

Denmark’s Orsted (OTC) agreed last month to sell 50% of the 1.3 GW Hornsea 2 project, in Britain to a French consortium at 3 billion Pounds ($3.69 Billion).

“The economics of doing development can be more attractive than buying operating projects,” Ireland said.

The sector is seeing increased competition as countries around the world try to cut carbon emissions and decrease dependence on Russia for energy.

Jonathan Cole, Corio chief executive said to Reuters that they are “almost at the start of an exponential growth curve”.

According to WindEurope data, Europe is the largest offshore wind market region and invested 41 billion Euros ($43.21 Billion) in wind farms for 2021.

($1 = 0.9489 euros)

($1 = 0.8123 pounds)