Canadian pension fund CDPQ, which has CAD $452bn in assets, has acquired a 30% indirect equity interest in US energy company AES Ohio to support improvements to grid infrastructure.
The pension fund has acquired the stake in the utility for approximately US $546m, with the deal expected to close in the first half of 2025. This follows CDPQ’s existing partnership with AES Indiana.
According to AES, CDPQ’s investment will help the utility invest US $1.5bn from 2024 to 2027 in energy infrastructure and grid improvements. It will also help meet the growing energy demand from AI data centres, which could increase peak load on the system by more than 50% by the end of 2030.
Improvements to grid infrastructure are considered vital for achieving net zero, as they will facilitate the transition from fossil fuels to renewable energy.
However, the coalition of climate organisations, Sortons La Caisse du Carbone, has warned that CDPQ’s investment should also be used to help accelerate the decarbonisation of the utility company. This is due to AES not being on track to align its electricity production with the objectives of the Paris Agreement, the coalition said.
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According to the International Energy Agency, electricity production must be carbon neutral by 2035 in developed countries such as the United States and Canada.
But, according to Sortons La Caisse du Carbone, AES Ohio’s recent environmental disclosures show that nearly 60% of its electricity is from fossil fuels. The company also reports a carbon intensity from its energy generation of 0.394 tons of CO2 equivalent per megawatt hour (tCO2/MWh).
“This is close to tripling the threshold of <0.138 tCO2/MWh which, according to the Transition Pathways Initiative's methodology, would allow the company to be aligned with a warming trajectory compatible with the goals of the Paris Agreement by 2030.
“The electricity producer will therefore have to work twice as hard to align itself with a safe climate trajectory,” the group said.
In an interview with Net Zero Investor at the beginning of this year, Marc André Blanchard, executive vice-president and head of CDPQ Global and global head of sustainability emphasised that the fund was committed not to contribute to new oil and gas exploration.
CDPQ: 'It is essential not to contribute to new oil and gas production'
