Investor Glennmont Partners has acquired a 50% ownership share in Orsted’s 900MW Borkum Riffgrund 3 offshore wind farm in the German North Sea.
The total transaction value is expected to amount to approximately Dkr9bn (€1.2bn) which comprises the price for the acquisition of the ownership share and the commitment to fund 50 % of the payments under the EPC contract for the entire wind farm.
Glennmont, which is wholly owned by the $1.3 trillion global asset manager Nuveen, is one of Europe’s largest fund managers exclusively investing in clean energy infrastructure.
Glennmont has structured its investment into Borkum Riffgrund 3 to meet the needs of its institutional investors including Nuveen’s parent, TIAA.
As part of the agreement, Orsted will construct the wind farm under a full-scope EPC contract, perform operations and maintenance services for 20 years, and provide a route to market for the power and green certificates generated by Borkum Riffgrund 3.
Orsted has designed a 20-year offtake agreement that provides Glennmont with a combination of fixed price and collared prices for 15 years for the majority of their share of the volumes whilst also leaving certain volumes exposed to market power prices.
Orsted has so far signed long-term fixed price corporate power purchase agreements on Borkum Riffgrund 3 for a total of 450MW.
Following the farm-down and the corporate PPAs that have been signed to date, Orsted’s merchant exposure in the first 10 years will be limited to the fixed and collared tranche agreement under the offtake agreement with Glennmont.
Orsted said it continuing to work on an advanced pipeline of additional PPAs with the aim to further optimise the remaining merchant exposure in the first 10 years and in the later years of the project.
The transaction is the Danish developer’s first farm-down to an institutional investor to be signed prior to taking final investment decision on the project.
Orsted chief commercial officer Martin Neubert said: “We’re delighted to extend our cooperation with Glennmont who are already partners in Gode Wind 1 and are focusing their entire portfolio on renewable energy infrastructure investments, thereby supporting the urgently needed shift from fossil-based energy sources to energy systems based on renewable energy sources.”
The divestment is subject to Orsted’s final investment decision, which is expected by the end of 2021, and to obtaining project permit and merger and foreign investment clearances.
Completion of the transaction is expected in the fourth quarter of 2021 or first quarter of 2022.