The acquisition of Borkum Riffgrund 2 offshore wind farm will help Keppel expand its renewable energy portfolio to 2.2GW, and triples Keppel Infrastructure Trust’s renewable energy portfolio to more than 700MW
Keppel, KIT to buy 25% of BKR2 offshore wind farm. (Credit: Nicholas Doherty on Unsplash)
Singaporean infrastructure company Keppel, and its unit Keppel Infrastructure Trust (KIT), are jointly acquiring a 25% stake in a 465MW offshore wind farm in Germany.
KIT is participating in the transaction through its trustee-manager Keppel Infrastructure Fund Management (KIFM).
Keppel and KIFM will jointly pay €305m to acquire a 50.01% stake in a special purpose vehicle (SPV) that holds 50% of the Borkum Riffgrund 2 offshore wind farm.
The companies will acquire the SPV from its current owners Gulf International, a subsidiary of Gulf Energy Development, a large-scale private power producer in Thailand.
The transaction is expected to close in the fourth quarter of this year.
Upon closing, Gulf will retain a 49.99% stake in the SPV, and Danish offshore wind power company Ørsted owns the remaining 50% stake in, and operates BKR2.
KIFM intends to fund the transaction with a combination of available cash, equity or debt capital market issuances and external borrowings.
Keppel is also planning to fund its share of the investment by way of capital contributions to the joint venture, through its subsidiary KRI.
Keppel Corporation CEO Loh Chin Hua said: “The demand for renewable energy is expected to intensify as the world journeys towards its net zero goal.
“We are pleased to strengthen our partnership with best-in-class partners such as Gulf and Ørsted through this transaction, and look forward to future collaboration opportunities.
“This transaction is aligned with Keppel’s Vision 2030, which see renewables, clean energy and decarbonisation solutions playing increasingly integral roles as we make sustainability our business.
“It also demonstrates how we can harness the Group’s eco-system and business networks to source for and capture opportunities to scale up in our focus areas and grow recurring income.”
BKR2 is located 59km off the coast of Lower Saxony in the North Sea, Germany, an area with high wind availability, with high average historical capacity factors of more than 40%.
The facility lies in a region close to the UNESCO World Heritage site ‘Wadden Sea’.
With an operating capacity of around 465MW, BKR2 has been fully operational since 2019, under the German EEG 2014 market premium mechanism.
The German EEG 2014 mechanism is said to provide an attractive Feed-in-Tariff and guaranteed floor price till 2038, along with strong cash flow visibility for the project.
In addition, BKR2 is also backed by a 20-year power purchase agreement (PPA) and a 20-year operations and maintenance agreement (OMA) with Ørsted, till 2038.
Last month, Keppel and KIT, alongside other partners, agreed to jointly acquire a 33.33% stake in a joint investment vehicle, for a total of €160m.
The partners include Kommunal Landspensjonskasse (KLP) and MEAG MUNICH ERGO Asset Management (MEAG), acting for entities of Munich Re Group including ERGO.
Olsen Renewables (FORAS), a developer, operator, and owner of renewable energy assets, will retain the remaining 51% stake in the projects.