Denmark’s DONG Energy on September 10 announced it is divesting 50 percent of the 330MW Gode Wind 1 offshore wind farm in German North Sea waters to Global Infrastructure Partners (GIP). DONG will rake in some 780 million euros ($884.5 million) as a result, the total amount to be received over the course of 2015-2016, management states in a press release.
Off- or onshore, wind power is a key, core element of Germany’s Energiewende, the strategic new energy plan that is guiding Western Europe’s most populous nation and largest economy as it phases out nuclear, and eventually fossil-fuel, energy and forges a ¨green,¨ low-carbon economy and society. Germany’s installed offshore wind power capacity accounted for nearly 36 percent of the EU’s 8.045 gigawatts (GW) total as of year-end 2014, second only to the UK, which accounted for 54.8 percent, according to the European Wind Energy Association (EWEA).
Government austerity, bank bailouts, ongoing economic travails and the scaling back, if not elimination, of EU member nations’ renewable energy incentives add to the barriers holding back more rapid deployment of wind and other renewable energy assets. They compound the high capital costs and technical challenges associated with bringing wind and other utility-scale renewable power generation and distribution capacity online. Consequently, DONG has been getting creative as it continues to add to its project pipeline and restructure its portfolio.
Creative financing in the offshore wind industry
Planning, raising capital for and building out public infrastructure that requires years to build and is meant to last multiple decades is fraught with risks and uncertainties at any time. It’s especially challenging at a time of rapid technological, socioeconomic and political change of the kind we have been and continue to experience today.
To Germany’s north, Denmark is the world´s leader when it comes to harnessing wind energy to generate renewable, emissions-free electricity and integrating it on to its power grid. One of Denmark and northern Europe’s largest power industry players, building, operating and investing in wind power farms has become one of DONG Energy’s principal business lines.
When and if fully operational Gode Wind 1 is said to be able to supply enough emissions-free renewable electricity to power some 340,000 German households. Consummating the sale of DONG’s 50% stake, GIP will issue a series of rated bonds that will be bought by a consortium of German insurance groups led by Talanx. DONG originated and was the central player in the development of a rated bond structure that meets the needs of institutional investors as well as offshore wind power project developers.
Moving forward, DONG Energy will complete construction of Gode Wind 1’s 55 Siemens offshore wind turbines, It will also provide long-term operations and maintenance (O&M) services from its base of operations in Norddeich, Germany. In addition, DONG is to identify and finalize the means by which Gode Wind 1´s electricity will be sent, sold and incorporated on to the German power grid.
DONG’s also working on innovative, more effective and less costly ways of building and operating offshore wind farms. On September 1, DONG and ESG tested 28 newly designed foundation piles for offshore wind farms at two different onshore sites. Undertaken as part of the PISA offshore wind industry project, the new piles were designed by the PISA academic working group led by Oxford University and including Imperial College London and University College Dublin.
“We’re very pleased with the test results, which confirm that traditional design methods in these soils are very conservative,¨ commented Alastair Muir Wood, lead geotechnical engineer at DONG Energy and PISA Project’s technical manager.
¨The results indicate that in these site conditions there may be opportunities for savings identified by reducing the quantity of steel in the foundation. In other words, there’s a savings potential, that will contribute to reducing the cost of electricity.”
*Image credits: 1) A2SEA; 2) DONG Energy