Ørsted Sells Half of Borkum Riffgrund 3 Offshore Wind Farm

Glennmont Partners has signed an agreement with Ørsted to acquire a 50 per cent ownership share in the Borkum Riffgrund 3 offshore wind farm in Germany.

The divestment is subject to the final investment decision on the project and to obtaining project permit and merger and foreign investment clearances, with completion of the transaction expected in Q4 2021 or Q1 2022.

This is Ørsted’s first farm-down to an institutional investor to be signed prior to taking a final investment decision, which the developer expects to make by the end of 2021.

The total transaction value is expected to amount to approximately DKK 9 billion (around EUR 1.21 billion), which comprises the price for the acquisition of a 50 per cent ownership share and the commitment to fund 50 per cent of the payments under the EPC contract for the entire wind farm.

As part of the agreement, Ørsted will construct the wind farm under a full-scope EPC contract, perform operations and maintenance services for 20 years, and provide a route to market for the power and green certificates generated by Borkum Riffgrund 3.

The developer said it had designed a 20-year offtake agreement that provides Glennmont with a combination of fixed price and collared prices for 15 years for the majority of their share of the volumes whilst also leaving certain volumes exposed to market power prices.   

The wind farm, which will be built and operated without subsidies, is expected to be commissioned in 2025 and become the largest wind farm in German waters with its 83 turbines and a total capacity of 900 MW.

Ørsted has already signed long-term fixed price corporate power purchase agreements (PPAs) for Borkum Riffgrund 3 for a total of 450 MW.

Following the farm-down and the corporate PPAs that have been signed to date, Ørsted’s merchant exposure in the first 10 years will be limited to the fixed and collared tranche agreement under the offtake agreement with Glennmont, according to the company.

“Ørsted is continuing to work on an advanced pipeline of additional PPAs with the aim to further optimise the remaining merchant exposure in the first 10 years and in the later years of the project”, the developer said.

In April, Germany’s Federal Maritime and Hydrographic Agency (BSH) granted planning approval to Ørsted for the 242 MW Gode Wind 3 offshore wind farm, whose construction will be carried out in parallel with the 900 MW Borkum Riffgrund 3 project.

Gode Wind 3 will go into full commercial operation in 2024 and the commissioning of Borkum Riffgrund 3 would follow in 2025.

The developer has already started lining up its suppliers for the two projects, some of the latest selected preferred suppliers being those for the installation of foundations and wind turbines.

At the beginning of last year, Ørsted conditionally named Siemens Gamesa Renewable Energy as the preferred turbine supplier for two offshore wind power projects, for which Siemens Gamesa would deliver its 11 MW turbines.

Borkum Riffgrund 3 will be connected to TenneT’s DolWin 5 offshore grid connection system and will not feature an offshore substation as the wind turbines will be connected directly to the DolWin epsilon platform via 66 kV cables.