Ørsted Sells Minority Interest in UK Offshore Wind Farms to Brookfield

Ørsted and alternative asset manager Brookfield Asset Management are forming a new partnership for the investors to take a minority stake in four of the company’s operating offshore UK wind farms.  Brookfield notes it is the group’s first investment in the UK offshore wind sector and involves its Brookfield Renewable Partners, a publicly traded platform for renewable power and sustainable solutions investments.

Under the terms of the agreement, Brookfield acquires a 12.45 percent stake in the portfolio made up of the Hornsea 1, Hornsea 2, Walney Extension, and Burbo Bank Extension offshore wind farms, which have a combined total capacity of approximately 3.5 GW. The transaction has a total enterprise value of $2.3 billion with a net to Brookfield Renewables of $570 million.

It is the latest example of the growing partnership between offshore wind developers and the investment community. Brookfield highlights the four wind farms are fully operational with long-term inflation-linked contracts for difference (CfD). 

“This marks another step in Brookfield’s expansion into the offshore wind sector, which is a mature technology with a generation profile complementary to solar PV and onshore wind,” notes the group. 

For Ørsted the partnership is part of a strategy announced in February 2024 to harvest equity from its operational windfarms which will support significant reinvestment in new assets. Ørsted, which will have a 37.55 percent ownership interest in the four assets after the deal, will continue to oversee the operations and management of the wind farms. Among the projects Ørsted is currently developing is Hornsea 3, which will consist of over 230 turbines with a total capacity of 2.9 GW and is expected to be completed around the end of 2027. Also in the development pipeline is the Hornsea 4 offshore wind farm which could have a capacity of up to 2.6 GW.

The agreement with Brookfield includes a call option, providing Ørsted with the opportunity, but no obligation to, repurchase the assets from Brookfield between two and seven years after the closing of the transaction at a pre-agreed price. The companies expect to complete the transaction by the end of 2024.

Institutional investors are showing increasing interest in the offshore wind power sector as it has matured. Eversource recently sold its interest in a joint venture in the U.S. with Ørsted to Global Infrastructure Partners, which was acquired by famed asset management group BlackRock. In Europe, Luxcara, an institutional asset money manager, has partnered with RWE for the development of offshore wind in Germany, while Copenhagen Infrastructure Partners (CIP) continues to be one of the leading investors driving the global growth of the sector.