Northland Power Buys Deutsche Bucht Offshore Wind Project

Canadian energy company Northland Power has signed a definitive agreement to acquire 100% of Deutsche Bucht, a 252MW wind project in the German North Sea.

The agreement was signed between Northland Power and a wholly-owned subsidiary of Highland Group Holdings.

Deutsche Bucht, or DeBu, is Northland’s third offshore wind project following the 600MW Gemini wind farm in the Netherlands and the 332MW Nordsee One wind farm in Germany.

It is located 95 kilometres northwest of the island of Borkum in the German Exclusive Economic Zone, 77 kilometres from Nordsee One.

The total estimated project cost is approximately EUR 1.2 billion. Northland expects to invest approximately CAD 400 million (EUR 281.6 million) of corporate funds with the balance of the project cost provided by project financing and pre-completion revenues. Financial closing is expected mid-2017.

DeBu is currently in an advanced development stage and is expected to enter the construction phase shortly after financial close, with project completion expected by the end of 2019.

Like Gemini, DeBu will use a two-contract construction strategy. MHI Vestas Offshore Wind has been selected as the preferred supplier to supply and install its 8MW turbines. MHI Vestas will also maintain the turbines under a long-term service contract.

An affiliate of Van Oord, the balance of plant contractor for Gemini and the other preferred supplier, will provide the turbine installation vessel and supply and install the wind turbine foundations and the offshore electrical infrastructure.

DeBu will be connected to the 800MW BorWin Beta off-shore converter station which has already been constructed.

Northland expects this investment will be sourced from cash on hand, corporate liquidity, and preferred shares.

DeBu is entitled to receive a fixed feed-in tariff subsidy for approximately 13 years under the German Renewable Energy Act (EEG), equating to approximately EUR 184/MWh for 8 years and EUR 149/MWh for the remainder.

The majority of the project returns are expected to be earned during the 13 year feed-in-tariff period, with the remainder of the expected returns earned in the later years from the German wholesale electricity market, the company said.

John Brace, Chief Executive Officer of Northland Power, said: “We are pleased to add a third solid and robust offshore wind project to Northland’s portfolio. Continued growth in the thriving offshore wind sector is an important component of Northland’s strategic development approach. DeBu will support our commitment to deliver long term value to shareholders, while aiding the global transition to clean and green energy sources.”

Closing of the acquisition is subject to clearing certain conditions precedent, which the parties will work to complete over the next several months, Northland said.

DeBu will bring Northland’s offshore operating capacity to over 900MW (net to Northland) over the next three years.