Acquisition in offshore wind and battery storage
20 December 2022
The Renewables Infrastructure Group Limited
"TRIG" or "the Company", a London-listed investment company advised by InfraRed Capital Partners ("InfraRed") as Investment Manager and Renewable Energy Systems ("RES") as Operations Manager
Investment in Merkur offshore wind farm and in a battery storage development
Merkur incremental stake
The Company has exchanged contracts to acquire a further 11% equity interest in the Merkur offshore wind farm (the "Project"), which is located in the German North Sea. This incremental investment is approximately 2% of TRIG's portfolio value. Upon completion TRIG will hold a 36% equity interest in Merkur and the total stake in the Project will represent approximately 6% of TRIG's portfolio by value.
The stake is being acquired from funds managed by InfraRed. Accordingly, the transaction process included an independent third-party valuation, which supports the transaction price, and approval by TRIG's independent Board of Directors.
The Project benefits from long-term protected cash flows through its Feed-in Tariff agreement. It also increases the Company's investments in the attractive German renewables market to 11% of portfolio value. The Project is well aligned with TRIG's portfolio construction approach of balancing subsidised and unsubsidised revenues and achieving a broad geographical spread across its selected European countries.
The Project comprises 66 GE Haliade-150 6MW offshore wind turbines, and GE Renewable Energy provides Operations & Maintenance ("O&M") services under a 10-year contract. The repair and retrofit works associated with the Merkur rear frame defect first reported in June 2021 are substantially complete and operating satisfactorily. The compensation due under the availability warranty for the year ended 31 March 2022 has been agreed with the turbine and O&M provider, with no financial impact on the carrying value for the Project.
Battery storage investment
TRIG has also acquired a 100% equity interest in Project Spennymoor, a battery storage development project which will have a total capacity of 100MW / 200MWh when completed, from RES.
Project Spennymoor is situated in County Durham, in close proximity to a high voltage substation connection, and is ideally located to alleviate grid constraints and provide balancing services for the significant industrial cluster in the Humber region, one of six major industrial clusters in the UK.
Project Spennymoor is in the late-stage development phase. RES has secured planning permission, a grid connection offer and land lease options. The project has secured a grid connection enabling commencement of operations in 2031. Work is underway to bring forward the grid connection date if possible. Construction works will be timed to commence approximately a year before the connection date when finalised. Once operational, Project Spennymoor is expected to represent 2% of TRIG's portfolio by value. The initial development investment is approximately 10% of the total anticipated investment.
Richard Morse, Chairman of TRIG, said:
"We are pleased to be further increasing TRIG's stake in Merkur, a project we know well. Merkur is one of six offshore wind farms in the TRIG portfolio, and an asset which reinforces our position of investing in attractive renewable energy projects that contribute to energy security and decarbonisation efforts across Europe."
Richard Crawford, Head of Energy Income Funds, InfraRed Capital Partners, said:
"TRIG's investment in Project Spennymoor deepens our position in the flexible capacity sector, which is going to become increasingly important as renewables penetration increases. Investments in battery storage projects such as these not only complement the renewable generation assets in the portfolio, but also leverage the strong expertise of InfraRed and RES."
InfraRed Capital Partners Limited +44 (0) 20 7484 1800
Maitland/AMO +44 (0) 20 7379 5151
Investec Bank Plc +44 (0) 20 7597 4000
BNP Paribas +44 (0) 20 7595 9444
The Renewables Infrastructure Group ("TRIG" or the "Company") is a leading London-listed renewable energy infrastructure investment company. The Company seeks to provide shareholders with an attractive long-term, income-based return with a positive correlation to inflation by focusing on strong cash generation across a diversified portfolio of predominantly operating projects.
TRIG is invested in a portfolio of wind, solar and battery storage projects across six countries in Europe with aggregate net generating capacity of over 2.4GW; enough renewable power for 1.7 million homes and to avoid over 2 million tonnes of carbon emissions per annum. TRIG is seeking further suitable investment opportunities which fit its stated Investment Policy.
Further details can be found on TRIG's website at www.trig-ltd.com.
InfraRed Capital Partners is an international infrastructure investment manager, with more than 180 professionals operating worldwide from offices in London, New York, Sydney and Seoul. Over the past 25 years, InfraRed has established itself as a highly successful developer and custodian of infrastructure assets that play a vital role in supporting communities. InfraRed manages US$14bn+ of equity capital1 for investors across the globe, across listed and private funds in both income and capital gain strategies.
A long-term sustainability-led mindset is integral to how InfraRed operates as it aims to achieve lasting, positive impacts and deliver on its vision of Creating Better Futures. InfraRed has been a signatory of the Principles of Responsible Investment since 2011 and has achieved the highest possible PRI rating2 for its infrastructure business for seven consecutive assessments, having secured a 5 stars rating for the 2021 period. It is also a member of the Net Zero Asset Manager's Initiative, a certified CarbonNeutral® company3, and is a TCFD supporter.
InfraRed is part of SLC Management, the institutional alternatives and traditional asset management business of Sun Life. InfraRed represents the infrastructure equity arm of SLC Management, which also incorporates BentallGreenOak, a global real estate investment management adviser, and Crescent Capital, a global alternative credit investment asset manager.
1 Data as at Q2 2022. Equity Capital is calculated using a 5-year average FX rate.
2 Principles for Responsible Investment ("PRI") ratings are based on following a set of Principles, including incorporating ESG issues into investment analysis, decision-making processes and ownership policies. More information is available at https://www.unpri.org/about-the-pri
3 In accordance with The CarbonNeutral Protocol. Further information is available at https://carbonneutral.com/the-carbonneutral-protocol
TRIG's Operations Manager is RES ("Renewable Energy Systems"), the world's largest independent renewable energy company.
RES has been at the forefront of wind energy development for over 40 years, with the expertise to develop, engineer, construct, finance and operate projects around the globe. RES has developed or constructed onshore and offshore wind, solar, energy storage and transmission projects totalling more than 22GW in capacity. RES supports over 9.5GW of operational assets worldwide for a large client base. Headquartered in Hertfordshire, UK, RES is active in 11 countries and has over 3,000 employees engaged in renewables globally.
RES is an expert at optimising energy yields, with a strong focus on safety and sustainability. Further details can be found on the website at www.res-group.com.