A stake in one of the world’s biggest offshore wind farms is going up for sale

Aberdeen offshore wind farm Image: Vattenfall

Swedish utility Vattenfall AB plans to sell a stake in what will be one of the largest offshore wind farms in the world.

The company has hired a financial adviser to sell part of the 1,500-megawatt Hollandse Kust Zuid wind farm development off the coast of the Netherlands a Vattenfall spokesman said by email.

Offshore wind farms, with their multi-billion dollar price tags and capacity to power millions of homes, have become a highly sought-after asset for investment funds and energy majors looking to decarbonize their portfolios.

“One cornerstone of Vattenfall’s growth strategy is to look for potential investors to balance the huge investment costs of our future assets,” the spokesman said. “We are just at the beginning of the process to attract potential partners/co-investors.”

Vattenfall said it’s too early to comment on the size of the stake. The company made a final investment decision on the project in June and plans to begin construction next year to complete the wind farm by 2023.

Investors have traditionally favoured offshore wind farms not just because of their green profile, but also their steady flow of returns guaranteed by government subsidies.

However, Vattenfall’s giant wind farm won’t have government support for the power it eventually sells. That makes the sale something of a test case for market appetite for such giant, unsubsidized projects.

While investment funds that have typically bought into these projects may balk at the uncertain returns, it could be an attractive option for oil majors.

Some of Europe’s biggest oil producers have aggressive goals to increase their renewable power production. Already this year, French oil company Total SE bought into a mostly unsubsidized wind farm under construction in the U.K. and Royal Dutch Shell Plc won an auction to build an unsubsidized Dutch offshore wind farm.

Vattenfall and any partner will likely get a similar return to Shell, that BloombergNEF expects to get about a five per cent to seven per cent return on its latest unsubsidized Dutch project.

© 2020 Bloomberg L.P.

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