IMCO’s Infrastructure Strategy Helps Power the Energy Transition
The need for renewable energy sources is intensifying as modern-day economies demand more power to run, while countries around the world continue to make net zero pledges.
The energy transition demands not just innovation but also significant capital deployment and long-term investment horizons, both of which IMCO provides as an institutional investor.
Renewable energy as a solution to skyrocketing demand
IMCO's Global Infrastructure team is seizing investment opportunities brought on by the outsized demand for more energy, driven an increasingly digitized world undergoing further urbanization.
By investing in assets that generate or store additional clean energy into the broader electric grid, we're increasing power supply while simultaneously decarbonizing the energy sector. This approach enables greater reliance on electricity, rather than fossil fuels, and leverages existing technology in growing markets.
Pulse Clean Energy
IMCO's commitment to the clean energy transition was established early on with the acquisition and formation of UK-based Pulse Clean Energy in 2021 – its first wholly owned operating company.
Pulse builds and manages battery energy storage systems that reduce greenhouse gas emissions by storing renewable energy from wind and solar for later use. When the wind isn’t blowing or the sun isn’t shining, the energy reserved can be accessed, providing low-cost, reliable electricity during peak demand times.
At the time of purchase, IMCO committed C$500 million to help Pulse convert diesel generation assets to grid-scale battery storage, execute its project pipeline and fund further growth.
One of Pulse's first diesel to battery conversion sites, located in Willoughby, Warwickshire UK. Image by Pulse Clean Energy.
Pulse is expected to grow to one of the largest investors, developers and owners of battery storage assets in the UK.
IMCO has been actively involved in the asset management of Pulse, including appointing IMCO and independent directors with areas of expertise that could provide strategic guidance and support long-term value creation, supporting company debt financings, and overseeing M&A and company strategy formulation and execution.
Most recently, Pulse collaborated on the launch of an innovative tool used to measure the reduction of CO2 emissions through the usage of battery energy storage systems using real time data. The UK BESS Carbon Emissions Calculator aims to be adopted industry wide to heighten ESG reporting credibility for the benefit of financiers, investors and policymakers investing in the space. While the calculator’s function is modeled through the lens of battery storage, it is also applicable to other renewable energy sources.
NeXtWind
In August 2023, IMCO, alongside two established investors, committed to invest up to US$750 million to acquire and fund the future growth of NeXtWind Capital Ltd, a German renewable energy company focused on acquiring and repowering aging wind turbines.
Wind turbines generate electricity by harnessing the wind to spin blades connected to a generator, producing clean energy without burning fossil fuels, thereby reducing CO2 emissions.
NextWind now owns more 230 wind turbines in more than 35 wind farms that can be repowered to 1.4 gigawatts of power — enough to supply roughly one million households annually.
NeXtWind assets within the Waldow wind farm, located in Germany. Image by NeXtWind.
With more than 28,000 onshore wind turbines with a capacity of 63 gigawatts in operation, Germany has the largest onshore wind fleet in Europe. Nearly 30 per cent of Germany’s turbines have been operating for more than 15 years, creating a compelling opportunity for NeXtWind to acquire and replace aging turbines with the latest in turbine technology to create long-term value for investors.
IMCO also holds a seat on NeXtWind's board of directors, strengthening its governance role and providing strategic input into the company's continued growth.
Investing for the long-term
IMCO’s clean energy infrastructure investments are rooted in managing business risks while pursuing growth opportunities.
As the global energy system evolves, investing through the lens of our environmental, social and governance approach is a crucial step in securing long-term viable returns for our clients.
Additionally, IMCO's Investment Research & Economics team's annual World View publication helps provide critical insights into what trends are influencing the global investment landscape. Climate Change and Sustainability is a key theme in the report that we monitor closely to help identify risks and opportunities related to sustainable investing.
About IMCO
The Investment Management Corporation of Ontario (IMCO) manages $86 billion of assets on behalf of our clients. Designed exclusively to drive better investment outcomes for Ontario's broader public sector, IMCO operates under an independent, not-for-profit, cost recovery structure. We provide leading investment management services, including portfolio construction advice, better access to a diverse range of asset classes and sophisticated risk management capabilities. As one of Canada's largest institutional investors, we invest around the world and execute large transactions efficiently. Our scale gives clients access to a well-diversified global portfolio, including sought-after private and alternative asset classes. Follow us on LinkedIn and X@imcoinvest.