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Pension funds start to enter offshore wind

UK: Pension fund money is at last entering the offshore wind sector with the acquisition by PensionDanmark of a 50% equity stake in the 165.6MW Nysted wind farm.

PensionDanmark of a 50% equity stake in the 165.6MW Nysted wind farm
PensionDanmark of a 50% equity stake in the 165.6MW Nysted wind farm

Despite being viewed as a potentially deep pool of money for the rapidly increasing offshore wind sector, pension funds have so far been slow to dive in.

The pension fund, the fourth largest in Denmark, is to buy 30% of the equity from DONG Energy for a cash consideration of DKK0.4 billion. At the same time, DONG will buy E.ON’s 20% share and resell it to PensionDanmark at a price of DKK0.3 billion.

The transactions leave DONG and PensionDanmark as equal owners of the seven-year old wind farm, located south of the island of Lolland. Under the deal, DONG will continue to operate the wind farm and will provide an operating guarantee to PensionDanmark; in return DONG receives a bigger share of the operating profit if the power price increases above its current level. The deal is subject to approval by the competition authorities.

"We hope that this agreement can pave the way for similar pension fund investments," says Anders Eldrup, CEO of DONG Energy.

Torben Möger Pedersen, CEO at PensionDanmark said: "PensionDanmark is the first pension fund that enters into a direct agreement with a major Danish industrial partner within this area.

"We believe that the model chosen can serve as a breakthrough for the investment of pension fund assets on a large scale in green technology and other infrastructure in Denmark."

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