Ørsted has closed a transaction with Energy Capital Partners (ECP), an energy transition-focused investor, to divest a 50% ownership stake in a portfolio consisting of three onshore wind farms and one solar farm in the U.S. The value of the transaction is approx. $410 million. The portfolio is spread across Illinois, Nebraska, South Dakota and Alabama, and three markets (MISO, SPP North, and TVA).
The portfolio, comprised of the onshore wind farms Lincoln Land Wind, Plum Creek Wind and Willow Creek Wind as well as the solar farm Muscle Shoals, is diversified across four U.S. states, representing a total capacity of 862 MW. The projects are all operational and have power purchase agreements in place for all or parts of the production capacity. Ørsted will be the managing member of the partnership and will continue to provide asset management services to the projects.
The transaction was funded via a fund-of-one partnership, Renewable Power Fund Plus, between ECP and Teachers Insurance and Annuity Association of America (TIAA), a U.S. Fortune 100 insurance and financial services organization, along with debt financing from Mitsubishi UFJ Financial Group (MUFG). Renewable Power Fund Plus now owns 50% of a newly established company holding the four projects. TIAA also owns global asset manager Nuveen and its subsidiary Glennmont Partners, who acquired 50% of Ørsted’s German offshore wind farm Borkum Riffgrund 3 in 2022.
This is not only Ørsted’s first farm-down of onshore assets, but also the first time Ørsted is divesting multiple assets in one transaction as part of its farm-down program. The transaction successfully recycles a material amount of capital that will support Ørsted’s ambition to reach 50 GW of installed renewable energy capacity globally by 2030. Ørsted currently has a portfolio of over 5 GW of onshore wind and solar PV projects in operation and under construction across the U.S. and Europe.
“I’m excited about bringing in such a leading investor as ECP, who has a proven and established track record in power and renewables, for the first farm-down in our onshore business,” says Neil O’Donovan, CEO of Ørsted Onshore. “I consider this transaction another key milestone in the onshore journey and a testament to the value our projects create. Our ability to raise capital will fuel our continued onshore growth. I’m proud of the team for making this transaction happen.”
“We are pleased to invest in this diverse portfolio of operating wind and solar assets, underpinned by long term investment grade cash flows in attractive markets,” states Schuyler Coppedge, partner at ECP. “Ørsted has a first-class reputation for owning and operating renewable projects around the world, and we are delighted to partner with them as they continue to grow and diversify their onshore business.”
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Author: Ariana Fine