The continent has witnessed a surge in acquisitions for offshore wind assets by utilities and independent power producers (IPPs), with the group collectively accounting for 50% of the M&A activity year-to-date in 2023. This is a significant rise compared to the activity observed during 2022, during which utilities and IPPs accounted for ~30% of the deal volume. The rest of the activity was driven primarily by European PE firms, such as CIP, TRIG, Greencoat, and GIP. Enerdatics understands that the surge in interest in offshore wind assets is attributed to improvements in the continent’s financing and project development environment, which is a result of recent measures taken by the EU. The measures include a $21bn InvestEU-EIB budgetary guarantee, which enhances utilities’ and IPPs’ access to development capital at low-interest rates. Further, recent EU regulations limit the permitting period for offshore wind projects to two years, reducing risks associated with development and construction and further improving operators’ access to non-recourse financing. The combined effect of both policies helps debt-reliant buyers offset the impact of cost inflation and increases their appetite for capital-intensive projects with a long lead time to first revenue.
Recent deal: Northland Power divests a 24.5% stake in the 840 MW Spiorad na Mara and 1.5 GW Havbredey offshore wind projects in the UK to Irish utility ESB. The deal aligns with Northland’s selective partnership strategy to sell interests in certain development projects on or before financial close. The company intends to utilize non-recourse project-level financing as the primary source of funding, with its equity requirements expected to be supported by cash on hand, proceeds from sell-downs, asset sales, the use of corporate hybrid debt, and equity issuances under its at-the-market (ATM) equity program.
Other significant transactions: Equitix Group recently acquired a 50% stake in a 2.4 GW operating offshore wind portfolio in the country from Macquarie Group. Other major transactions in the current year include Daiwa Securities’ farm-in to the 1.2 GW Hornsea 1 offshore wind farm and INPEX's acquisition of a stake in the 950 MW Moray East wind farm.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.