Market News

 February 20, 2012
Report: E.ON to sell German offshore wind stakes to fund larger projects

 E.ON is reportedly in talks with financial investors to help fund a €7bn offshore wind investment programme over the next five years.

E.ON Climate & Renewables head Mike Winkel told the Financial Times Deutschland that the company is hoping to sell minority stakes in wind farm assets to help fund larger projects.

The company said in December it would spend €7bn to expand its renewable energy business over the next five years, following the German government's decision to scrap nuclear power and grow renewable energy supplies.

E.ON is reported to be keen to attract pension funds and insurers, which are typically more open to longer-term payback periods than venture capital firms, as it seeks to raise additional capital to fund the investment programme.

PricewaterhouseCoopers (PwC) recently forecast the wind power market would start to consolidate this year, with a greater number of institutional investors starting to back projects, following a landmark deal between Dong Energy and PansionDanmark last year.

However, Winkel also warned that E.ON could halt its investment in German offshore wind farms after 2015 because of delays in connecting them to the power grid.

He told the Berliner Zeitung newspaper that the Amrumbank West project in the North Sea will be delayed by about 15 months, and E.ON cannot reach financial closure on two further projects because of the delays.

In related news, the Bank of London and The Middle East (BLME) today announced it has signed a £14m deal to help fund the UK's offshore wind supply chain.

BLME said it has signed a deal to help Global Marine Systems buy and retrofit an offshore power cable installation barge, making it more flexible for the next generation of offshore wind farms that will be further out to sea in deeper waters.

Once complete, the barge will be equipped with a 4,000 tonne carousel, six-point mooring system, and a single drum winch with a pulling force of 180T. It will also include a plough that can bury both high-voltage (HV) AC and HVDC cables, which are better for transporting energy over long distances.

Gabe Ruhan, group chief executive at Global Marine, said the vessel would help to meet the growing demand for cable installation vessels and barges throughout Europe.

"As a leader in offshore power cable installation, adding tonnage to our fleet such as [the new vessel] Cable Enterprise, specifically designed to meet the demanding requirements of the market, will expand our ability to deliver projects for our energy customers with attention to detail and quality," he said.

Jervis Rhodes, head of corporate banking at BLME, said the funding would allow the bank to contribute to the UK's efforts to diversify its energy mix.

Graeme Laing, head of leasing at BLME, added that the bank hopes to complete further similar transactions this year.