Danish financial giant CIP in the “climate laboratory”: “We bury 100 billion euros for our investors”

How to build a wind farm or an energy island? You need money, a suitable project and the permits – then you can call the craftsmen, explain Florian Küster and Moritz Weiß the economic triad. The sums used are gigantic: The energy developers of the Copenhagen Infrastructure Partners (CIP) from Denmark put at least 100 billion euros of their investors into green projects. “There are not that many people who have the mandate or the skills to handle such sums,” say Küster and Weiß in ntv’s “Climate Laboratory”. Demand is high, CIP is currently building and operating around 30 renewable energy projects around the world and has significantly more in the pipeline. But dark clouds are gathering on the European horizon: Rising interest rates reduce the willingness of some investors to take risks, while others only want to benefit from the American subsidy hammer.

ntv.de: On your website you describe yourself as “Energy Entrepreneurs”. What do you have to imagine?

Moritz Weiß: We are one of the largest developers of large-scale renewable energy projects in the world. So we look at where you can produce renewable energy and implement these projects with local governments and companies to make the energy supply of individual countries greener and cheaper than with conventional energy sources.

You once said that we would have already achieved the energy transition if there were 50 of them, because their projects eliminate two percent of CO2 emissions. Is it really that easy?

Moritz Weiß: No, it’s not that simple (laughs). In Germany, the capacity of renewables is currently around 140 gigawatts. Our pipeline includes projects with a capacity of 120 gigawatts. This would eliminate about one percent of global emissions. This goal is within reach for us and we don’t want to stop there, but continue towards two percent.

And how much money does one have to invest to save one percent of global emissions?

Florian Küster: We want to bury around 100 billion euros for our investors. In addition, there is usually additional money from banks or joint venture partners for large projects of this type. The 100 billion will be used as a lever, so to speak, to realize significantly larger sums for all projects.

So 100 times 100 billion euros would be necessary to decarbonize the world’s entire energy supply?

Florian Kuester: That is correct. There are not that many people who have the mandate or the skills to handle such sums.

There are probably not that many people who have such sums at their disposal.

Florian Küster: Not private individuals, no. It is primarily institutional investors, pension funds and insurance companies that invest in companies like us. But there aren’t an infinite number of them either. Capital is therefore definitely needed to achieve the climate targets.

And this money goes entirely into new projects? Or will old systems also be converted? After all, the construction of a wind farm also causes emissions in the first place, even if it subsequently saves some.

Moritz Weiß: I just learned that a search query on ChatGPT uses about eight times as much energy as a normal Google search. Our energy consumption will therefore increase drastically as a result of new data centers. That’s where the journey goes.

We need more energy, yes. But then we still haven’t saved a single ton of CO2.

Florian Küster: It is clear that we as a society need more electricity. On the one hand, this is due to digitization and new data centers, but on the other hand, it is also due to areas such as transport and power generation, because we want to decarbonize them with renewables.

This electricity would otherwise be produced with fossil fuels, how does this saved percentage come about?

Florian Küster: The “save” comes from “replace”. We need more renewable electricity. Where and how can it best be produced and fed into the grid? For example, where conventional power plants are located, because there is already a grid connection there. We are looking at whether these power plants can and will be converted to use the existing infrastructure. But of course that’s not always possible. I don’t know anyone who has built a gas power plant at sea.

And how exactly does that work? Operators of conventional power plants like RWE approach CIP and say that they would like to build a wind farm?

Florian Küster: That depends on the project. If the German government puts offshore fields out to tender, we will certainly find ourselves in a bidding process with German energy suppliers. However, we have already implemented projects with local energy suppliers as partners. Then both own 50 percent. We don’t have a mantra, we try to implement as many projects as profitably as possible.

Who else is eligible as a partner?

Moritz Weiß: My main task is to get in touch with large German insurance companies, pension schemes or pension funds, i.e. the large traditional capital collection points, and to get them excited about investing in our projects.

Florian Küster: I always explain it in three steps. First, we need someone to give us money. We get that on the market by saying that we want to realize a great renewable energy project. Then we actually need a suitable project. We have a team that looks at where it is best to build a wind farm, a solar park or where geothermal energy makes sense. This team procures the project rights and works through the approval process. This is classic project development. Once we have capital and permits we can order trades, materials and construction cranes and anything else needed for the project. This is the third step. Then we carry out the construction and operate the projects for between 10 and 15 years until we sell them and return the invested capital to our investors.

Do you plan and build the wind farms yourself?

Florian Küster: Of course we are not developers of turbines, companies like GE, Siemens and Vestas specialize in this. When we talk about an offshore wind farm, the turbines also need a foundation. These are huge, very heavy steel constructions. We award this order to companies that specialize in it. We also don’t have any special ships for the construction of an offshore facility. Our task is to bring together the manufacturers and suppliers of turbines, foundations and the owners of the ships and to implement the project together with everyone.

You are the builder.

Florian Kuester: Correct.

How many projects are currently in your portfolio?

Florian Küster: There are around 30 under construction and in operation and a lot more in development.

And these are mostly wind farms – at sea, but also on land?

Florian Küster: One third of the projects is offshore, one third is onshore and solar and one third is “best of the rest”, so to speak. This can be geothermal energy, biomass, something with batteries or pumped storage power plants. It is similar geographically: one third of the projects are in North America, one third in Europe and one third in Asia.

In Germany and Europe, the Ukraine war has given new impetus to the energy transition. Did you notice that too? Have more financiers come by to realize projects?

Moritz Weiß: Unfortunately no, because unfortunately the Ukraine war also caused other changes, such as the turnaround in interest rates. It swept away venture capital overnight for many large investors. That is why the money flows in this area are currently rather lower than before the war.

And since all political confessions help nothing? People are always talking about the importance of renewable energies.

Florian Küster: Our investors certainly don’t have the deepest pockets at the moment. At the same time, we are already feeling significant support from the governments in Europe and the USA, at least it has been announced. Now, of course, we have to hope that this will also be implemented.

Moritz Weiß: You can see that very clearly in the American Inflation Reduction Act (IRA). This is currently leading to a complete shift in the Power-to-X area, i.e. in hydrogen and ammonium production. Up until a year ago, Europe was ahead in this area. The forefathers, like Thyssenkrupp, Linde and other companies, are all European. The American government has completely postponed this with its subsidy program of more than 380 billion dollars. Many projects in Europe have been stopped. It remains to be seen whether the EU will adjust its support. Here, many insurance companies and pension funds only want to explicitly invest in US projects at the moment because they can easily achieve high returns there through the gigantic funding.

Is that good or bad for you now?

Moritz Weiß: That depends. For us as a company, it’s great because we can ask for significantly better returns in America. If you ask us as Europeans, that’s not necessarily a good thing because our industries are migrating to America.

Have you spoken to the German government or the EU Commission about this problem in Brussels or Berlin? So among Europeans?

Florian Küster: We are in contact with local governments, but of course also with the EU. There are positive signals from all directions and in the end it will be seen whether more will come of it. Of course it would be better if we could realize many projects in the USA, Europe and Asia, but if there are only a lot in the USA, that’s great too.

Clara Pfeffer and Christian Herrmann spoke to Moritz Weiß and Florian Küster. The conversation has been shortened and smoothed for better understanding.