– I feel the responsibility, but I look forward to putting the money into work as soon as possible. In a good way, Thorleifsson says to NRK.
Norfund is the state’s fund for investments in developing countries. The assignment is to make capital available for good projects that otherwise would not have been financed because the risk is high. More than half of the investments go to renewable energy.
– The needs are enormous when it comes to clean energy in developing countries, says Thorleifsson.
Norfund will invest where most people do not dare – and preferably make money from it. If all goes well, the money can be used again and again. If it goes bad, it quickly becomes headlines.
Like when the fund was threatened with lawsuits after afforestation in Africa became a loss drain. Or when it became known in May that the fund had been defrauded for NOK 100 million.
But on Friday just over a week ago, the focus was on a billion-dollar success.
Earns fat from the sale of hydropower
On 16 October, it was announced that Norfund will sell the company SN Power to the solar energy company Scatec Solar. SN Power operates hydropower in Uganda, Zambia, Laos, Madagascar and the Philippines, among others.
The profits were hefty. Of the sale price of NOK 10.9 billion, Norfund books NOK 6 billion as a gain.
– We prove through this that capital can be recycled. In traditional aid, you give the money without getting it back, but you will hopefully have a development effect. Here we get both a positive development effect, it reduces local pollution and CO emissions, and we have received a high economic return. So it is a win-win, says Thorleifsson.
Sniffing at sea breezes
11 “healthy” billions is a lot of money for Norfund. It roughly corresponds to the value of all the fund’s energy investments at the end of 2019.
It also happens to be the sum of all the climate measures in next year’s state budget.
The Norfund boss envisages putting most of the money back where it came from, ie in clean energy. Thorleifsson emphasizes that the fund never invests alone.
– When we go in with these 11 billion, private capital will account for an estimated 20 billion more. In addition, the projects will be mortgaged. So 11 billion in increased capital for us will trigger investments far greater than that, he says.
He says that the fund is looking at new hydropower projects on the border between Congo and Rwanda. In addition, Malawi, Madagascar and Myanmar are relevant for new hydropower. Both small and large solar parks are on the block.
However, the sale of SN Power gives so much money in the coffers that the fund can look at even larger projects. Among other things, offshore wind outside Vietnam is relevant.
– Offshore wind is still more expensive than much else. Is it really on offshore wind you get the most for your money?
– Here we are talking about countries where you have a shortage of land. We complain about wind turbines in Norway even though we have the best place of almost everyone. You can imagine countries where the population density is insanely much higher. There, using areas in shallow water near land is not particularly expensive.
Is prepared for scandals
Back to this with risk.
One thing is that the economic risk is high, as evidenced by a failed investment in rice production in Tanzania recently.
The nature of the assignment means that Norfund often has to navigate in murky waters. The fund was set up to remedy the problem of capital shortages in developing countries. And there is one superficial to the fact that many developing countries lack capital.
The risk of being involved in corruption, money laundering, fraud or a bunch of other problems keeps many investors away.
– How do you ensure that the money goes where it is supposed to go, and that you do not launder other people’s dirty money?
– We go long rounds where we get to know our partners, with our sponsors, who is behind, co-investors and so on. But we can never guarantee that we do not go to bed with someone who later turns out not to have clean flour in the bag, says Thorleifsson.
In order to reduce the financial risk, Norfund is not allowed to invest alone. But finding good partners is not easy either. Statistically speaking, “high risk” means that sooner or later things will go wrong.
– It is difficult and complicated, and we are humbled that we from time to time will get so-called scandals where Norfund has invested with someone.
I think the Norwegian climate debate can be navel-gazing
In Norfund, they are particularly concerned about the climate effect of the investments they make. Prior to the SN Power sale, the fund had invested just over NOK 10 billion in clean energy. According to the fund’s own calculations, these investments contribute to cutting 8 million tonnes of greenhouse gas emissions a year.
This corresponds to around one sixth of Norgestør in emissions or the entire car fleet. It is a very effective way to reduce emissions.
Thorleifsson calls for a debate on how Norway can best contribute to cutting emissions globally.
– I understand that we must have a national approach as well, that we can not just take everything out. But sometimes I feel that it becomes very navel-gazing that we only talk about what is within our boundaries, he says.
Thorleifsson believes that clean energy in developing countries is one of the most cost-effective climate measures to be pursued.
– And in addition, we get a positive development effect, he says.
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