Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

IKEA’s Ingka Investments makes “bold move” to offshore wind

Offshore wind turbine.
Photo by Dev Kalidhasan on Unsplash

Ingka Investments, the investment arm of IKEA’s parent company Ingka Group, has invested €58 million to acquire stakes in three Swedish offshore wind farms. The move highlights a growing trend for corporate upstream investment in renewable energy to scale-up supply and demand, which can accelerate decarbonisation and create new revenue streams.

Ingka Investments announced a €58 million investment to acquire stakes in three Swedish offshore wind farms.

The move highlights a new financing model to scale-up offshore wind to meet increasingly ambitious goals.

A trend of businesses investing directly in renewable energy projects shows that decarbonisation can create new revenue streams.

World’s largest offshore wind farm

The €58 million investment means that Ingka Group will acquire a 49% share in the Galatea-Galene, Triton, and Aurora offshore wind projects in Sweden. Once operational, the Aurora project will be the world’s largest offshore wind farm at a whopping 5.5 GW.

The three projects together have the potential to reach 9 GW of clean energy capacity once operational, which corresponds to more than a quarter of the electricity consumed in Sweden in 2021.

The stakes were bought out from OX2 (ST: OX2), a renewable energy developer that had already invested €18.8 million in developing its first offshore wind projects. 

Following the successful permitting of the projects and if both parties agree at that time to continue the joint development of these projects, OX2 will also receive a pre-agreed price equivalent of up to €100,000 per MW for 49% of the planned total capacity.

The new investment from Ingka Group will support the developer in ramping up its offshore organisation and capabilities. OX2 sees potential for offshore wind to contribute to the developers’ overall operating income, and intends to increase development costs for offshore wind over the coming years.

OX2’s CEO Paul Stormoen said that they have received great interest from the market to introduce large-scale offshore wind production into the Swedish energy system. 

“Once established, the wind farms will create long-term jobs and business opportunities both locally and regionally as the access to electricity increases”, commented Stormoen.

A new type of partnership to scale up offshore wind

Due to high capacity factors and ability to deploy at large scale, offshore wind offers massive decarbonisation potential and has quickly become a cornerstone of many countries’ net-zero strategies.

In 2022, the European Union increased its offshore wind target to 300 GW by 2050 to increase the region’s energy security while accelerating decarbonisation. The upgraded target was announced following the Ukraine crisis which has severely impacted Europe’s energy supply and prices.

However, achieving this goal will require significant action considering that there is currently just 14.6 GW of offshore wind capacity installed in the European Union.

While the costs for offshore wind have declined rapidly over the past decade, a large amount of capital is still required to develop these clean energy projects due to their scale and complexity. 

Considering the massive scaling up of offshore wind that Europe and other countries around the world are aiming to achieve, investment into offshore wind will need to increase dramatically to realise these ambitions.

In the first half of 2022, BloombergNEF estimates that there was approximately $32 billion in offshore wind investments – up 52% from the previous year.

“Offshore wind projects enable companies and governments to make progress towards their decarbonisation goals at scale. The United Kingdom, France and Germany are just a few countries that have increased their offshore wind targets in the first half of 2022, signalling further support for investment in the technology”, explained BloombergNEF’s offshore wind analyst Chelsea Jean-Michael.

With new offshore wind goals creating new opportunities, the partnership between Inkga Group and OX2 highlights a unique partnership to take advantage of these opportunities and secure financing for offshore wind projects to scale up supply and demand.

Renewable energy creates new business opportunities

“This cooperation is a bold move in expanding our investment activities to address climate footprint reduction well beyond our own consumption and into our value chain”, explained Ingka Investment’s managing director Peter van der Poel.

While this is both OX2 and Ingka Group’s first partnership in offshore wind, the two companies have worked together before under similar partnerships for onshore wind and solar PV projects.

Since 2009, Ingka Investments has put over €3 billion into renewable energy projects, which has enabled the group to generate more renewable energy than it consumes across its global operations. 

Ingka Investments plans to increase this investment to €6.5 billion to transition towards 100% renewable energy across the value chain. The group aims to produce 15TWh of renewable energy, which could reduce their carbon footprint by six million tonnes compared to the baseline in its 2016 fiscal year.

In total, Ingka Group owns 575 wind turbines in 17 countries, 20 solar parks, and 935,000 solar panels on the roofs of IKEA stores and warehouses – equivalent to the annual electricity consumption of over 1.25 million European households.

Electricity subscription service

IKEA has also started offering renewable electricity to its customers in Sweden through an electricity subscription service. This service allows customers to buy affordable, certified electricity from wind and solar, and use an app to track their own electricity usage. This is on top of IKEA’s existing solar panel services available already in eleven countries.

The group estimates that its renewable energy portfolio generates a new revenue stream of €280 million annually through the sale of its excess renewable energy, primarily to suppliers in the IKEA value chain.

Shifting towards simply procuring renewable energy, through mechanisms such as Power Purchase Agreements (PPAs) or Renewable Energy Credits (RECs), towards ownership of renewable energy projects allows the group to not only reduce their carbon footprint for their own operations as well as upstream and downstream, but also reduce energy costs and create new revenue opportunities.

This strategy signals that it can pay off to take bold steps towards decarbonisation. Since 2016, Ingka Group’s business grew by 17.6% while achieving a 6.5% climate footprint reduction.

Other corporates have also made the move to invest directly in renewable energy projects as a key tool to decouple growth from emissions. In August 2022, tech giant Apple (NASDAQ:AAPL) announced it invested in a 600 MW onshore wind farm in Australia to mitigate emissions from customers charging Apple products.

The backing of renewable energy projects by major corporations such as Ingka Group and Apple shows a growing trend that renewable energy can be good for business and there is a growing demand for clean energy. By supporting the financing of renewable energy projects, businesses can play an important role in fulfilling this demand while reaping economic dividends.

More from SG Voice

Latest Posts