Keppel Buys Stake in German Offshore Wind Farm

Keppel Corporation Limited and Keppel Infrastructure Fund Management are jointly investing EUR 305 million to acquire a 50.01 per cent stake in a special purpose vehicle that holds 50 per cent of the Borkum Riffgrund 2 offshore wind farm in the German North Sea.

The special purpose vehicle is currently wholly owned by Gulf International Holding, a subsidiary of Gulf Energy Development Public Company Limited, one of Thailand’s largest private power producers.

Post-acquisition, Gulf will retain a 49.99 per cent stake in the special purpose vehicle.

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Ørsted owns the remaining 50 per cent stake in Borkum Riffgrund 2 and is the operator of the wind farm.

Fully operational since 2019, Borkum Riffgrund 2 has an operating capacity of approximately 465 MW and is located 59 kilometres off the coast of Lower Saxony in the North Sea, Germany.

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 the wind farm, Keppel said.

”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,” Loh Chin Hua, CEO of Keppel Corporation, said.

Borkum Riffgrund 2 operates under the German EEG 2014 market premium mechanism, which has a Feed-in-Tariff and guaranteed floor price till 2038. The project also holds a 20-year power purchase agreement and a 20-year operations and maintenance agreement (OMA), until 2038, with Ørsted.

”This transaction marks KIT’s first investment in the offshore wind sector, and our second investment in the European renewable energy market, further reinforcing our strategy to grow our Energy Transition segment and almost tripling KIT’s renewable energy portfolio to over 700 MW,” Jopy Chiang, CEO of Keppel Infrastructure Fund Management, said.

”Underpinned by favourable tailwinds such as energy security, electrification and higher projected demand for green energy in the future, this investment underscores the global acceleration towards decarbonisation and net-zero. The Trust will continue to make inroads to capture more opportunities in the renewable energy sector, in support of our ESG target.”

The transaction is expected to be completed in the fourth quarter of 2022. Keppel Infrastructure Fund Management intends to fund the investment with an optimal combination of internal sources of funds, equity and/or debt capital market issuances and/or external borrowings. Keppel Corporation, through its wholly owned subsidiary, KRI, will also fund its share of the investment by way of capital contributions to the joint venture.

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Photo: Illustration; Borkum Riffgrund 2 offshore wind farm in Germany; Photo source: Ørsted