Joint venture takes Hochtief to 2GW

GERMANY: The acquisition of four offshore wind farms by German construction company Hochtief from the project developer Enova means Hochtief is now developing five wind farms in the German Exclusive Economic Zone in the North Sea.

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The five offshore projects will have a total power output of nearly 2GW and are located between 160 and 200 kilometres from the island of Borkum in the German Bight, covering a sea area of more than 300 square kilometres. The wind farms represent some of the furthest from shore currently being developed in the North Sea.

Hochtief acquired the four projects as joint ventures (JVs) with its venture capital partner Ventizz. The Nautilus II wind farm - already owned by Hochtief and Ventizz in a 50-50 partnership - will now be joined by the North Sea Wind Power 4-7 far-shore projects.

The JV, known as Hochtief Offshore Development Solutions, has become one of the most significant North Sea offshore wind players through the deal.

Willi Mannheims, general partner at Ventizz, said: "This transaction gives the joint venture a significant boost. Taken together, Hochtief Offshore Development Solutions now manages an offshore wind portfolio of approximately 2GW."

Hochtief said it intends to develop the four new projects together with Enova until it receives authorisation from the German regulator, the Federal Maritime and Hydrographic Agency. Applications for this authorisation have been submitted.

The involvement of a venture capitalist such as Ventizz is further evidence of the increasing involvement of institutional and financial investors such as infrastructure funds, large industrial companies and insurance funds during the preconstruction phase - usually seen by investors as the phase of highest risk.

Good intentions

At the end of last year Hochtief's head of energy and infrastructure Ullrich Reinke said the company "intended to purchase at least two wind-farm concessions in German waters".

Farook Khan, a partner and offshore energy specialist at international law firm Pinsent Masons, commented on the deal.

"It is interesting to see a private-equity player such as Ventizz entering the offshore wind market with a view to eventually selling on the projects once authorisations are in place - but preconstruction," he said.

Hochtief and Ventizz have identified potential purchasers of the projects to include institutional or financial investors such as infrastructure funds or insurance companies, Khan added. "When the time comes to sell these projects as planned, the challenge for the two JV partners will be to convince this new breed of investor to take on construction risk."

In 2011, Danish pension insurance group PensionDanmark and PKA acquired a 50% interest in Dong Energy's Anholt offshore wind project. In that case, the investment covered the construction costs but the risk remained with the developer.

Kahn concluded: "Whilst construction risk in offshore wind farms will ease over time as experience develops, for the time being this will remain a potential obstacle to any onward sale by Hochtief and Ventizz to a financial buyer."

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