Offshore staff
SINGAPORE — Keppel Corp. Ltd. and Keppel Infrastructure Fund Management, the trustee-manager of Keppel Infrastructure Trust (KIT), are jointly investing €305.0 million (US$312.9 million) to acquire a 50.01% stake1 in a special purpose vehicle (SPV) that holds 50% of Borkum Riffgrund 2 (BKR2), an offshore wind farm in Germany.
The SPV is wholly owned by Gulf International Holding Pte. Ltd., a subsidiary of Gulf Energy Development Public Co. Ltd., one of Thailand’s largest private power producers. Post-acquisition, Gulf will retain a 49.99% stake in the SPV. Ørsted owns the remaining 50% stake in BKR2.
Fully operational since 2019, BKR2 has an operating capacity of about 465 MW and is located 59 km off the coast of Lower Saxony in the North Sea, Germany, which is an area with high wind availability as reflected in the high average historical capacity factors of more than 40%. The region is next to the Wadden Sea, an UNESCO World Heritage site. Hence, it is unlikely for wind farms to be built at the Wadden Sea, mitigating potential reduction in wind availability to BKR2.
BKR2 operates under the German EEG 2014 market premium mechanism, which has an attractive Feed-in-Tariff and guaranteed floor price until 2038, providing strong cash flow visibility for the project. This arrangement de-risks the asset.
The project also holds a 20-year power purchase agreement and a 20-year operations and maintenance agreement until 2038 with Ørsted. The long-term operations and maintenance agreement has a largely fixed operational cost base, which provides significant cost certainty and cash flow visibility.
As the 50% shareholder of BKR2, Ørsted will continue to operate BKR2 with a strong alignment of interest.
Germany has been rapidly growing its renewable energy market and has committed to phasing out coal and nuclear power. In February Germany brought forward its 100% renewables target by 15 years to 2035 and announced the country’s plan to triple the pace of capacity expansion for wind and solar.
Following Keppel Corp. and KIT’s investment in onshore wind farm assets across Sweden and Norway announced on July 13, this transaction further accelerates the growth of the group’s exposure in renewable energy assets. Upon the completion of this investment, the group will have a total renewable energy portfolio of about 2.2 GW, including assets under development. The transaction will also contribute to KIT’s target of increasing exposure to renewable energy assets by up to 25% of equity-adjusted AUM by 2030, increasing KIT’s exposure from 4% to 11%.
The transaction is expected to be completed in the fourth quarter of 2022.
1. KIT and Keppel Corp. will hold an effective stake of approximately 20.5% and 4.5% in BKR2, respectively. These stakes are held through an 18:82 joint venture between Keppel Renewable Investments Pte. Ltd., a wholly owned subsidiary of Keppel Corp., and KIT.
08.12.2022
