Ørsted to sell 50% stake in 1.2 GW UK offshore wind farm for US$6 billion

Ørsted has announced that it has signed an agreement to sell 50% of the 1,218 MW Hornsea 1 offshore wind farm to Global Infrastructure Partners (GIP). Located off the coast of Yorkshire, north-east England, Hornsea 1 is currently in construction and will be the world’s largest offshore wind farm when commissioned in 2020.

As part of the agreement, Ørsted will construct the wind farm under a full-scope EPC contract. Ørsted will also provide long-term operations and maintenance services and provide a route to market for the power generated by Hornsea 1.

The total sales price comprises the price for the acquisition of a 50% ownership share and the commitment to fund 50% of the payments under the EPC contract for the entire wind farm (including the transmission assets). It amounts to approximately GBP4.46 billion (US$5.86 billion), which is to be paid between 2018 and 2020.

GIP will partially finance its acquisition using a multi-tranche financing package of more than GBP3.5 billion (US$4.6 billion), containing a mixture of investment grade-rated project bonds issued to a consortium of blue chip institutional debt investors with strong UK presence, commercial bank loans and mezzanine debt provided by the Danish pension fund PFA, with some tranches guaranteed by EKF, Denmark’s Export Credit Agency.

The financing, which will be the largest single-project financing to date in the global renewable energy sector, was structured and led by Ørsted, and co-arranged with GIP.

The transaction is subject to certain regulatory approvals, including from relevant competition authorities, and is expected to close in Q4 2018. Approximately 85% of the total profit (EBITDA) from the transaction is expected to be booked in 2018.

GIP also holds 50% ownership shares of two of Ørsted’s German offshore wind farms, Gode Wind 1, which was inaugurated in June 2017, and Borkum Riffgrund 2, which is currently being commissioned.

Ørsted also pursued this investment strategy with the Walney Extension offshore wind farm, located in the Irish Sea off the coast of Cumbria, north-west England. While the project was in construction, the company divested a 50% stake, this time to two Danish pension funds. The 659 MW wind farm opened earlier this month, making it the largest operational offshore wind farm in the world.