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RWE's £963 Million Investment: Acquiring Vattenfall's 4.2GW Norfolk Offshore Wind Portfolio

Image credit: RWE

In a groundbreaking development, RWE, the German energy juggernaut, has secured the rights to steer the growth of three colossal offshore wind projects off Norfolk's picturesque coast, amassing an awe-inspiring 4.2 GW of planned capacity. This monumental achievement comes on the heels of a momentous £963 million agreement with the Swedish state-owned energy titan, Vattenfall, an alliance that promises to reshape the landscape of offshore wind energy.

Nestled 50-80km off the enchanting east coast of England, within the Norfolk Offshore Wind Zone, the triumvirate of projects—Norfolk Vanguard West, Norfolk Vanguard East, and Norfolk Boreas—each boasts an ambitious 1.4GW of planned capacity, their journey spanning over a remarkable 13-year odyssey of development.

In the twilight of their development, these projects have deftly secured seabed rights, grid connections, Development Consent Orders, and an array of essential permits. They stand on the brink of ushering in a new era, primed to commence full-scale operations within this decade, as affirmed by RWE.

The Norfolk Vanguard, West and East endeavours have assumed the mantle of leadership in this grand symphony, having masterfully secured the majority of critical components. The next stage in their quest for excellence is pursuing a coveted Contract for Difference (CfD) in forthcoming auction rounds.

However, the Norfolk Boreas venture faced a momentary pause in July. Vattenfall revealed that project costs had surged by 40 per cent, courtesy of inflationary pressures gnawing at the heart of materials and labour expenses. Industry pundits described this as a "major wake-up call" for the UK's offshore wind sector.

RWE's resolute decision to acquire and nurture all three projects stands as a resounding endorsement of the UK's offshore wind industry, aligning seamlessly with the government's ambitious vision to elevate the nation's offshore turbine capacity to a staggering 50GW by 2030, a remarkable ascent from the current 14GW.

The agreed-upon purchase price for Vattenfall's illustrious portfolio rests upon an enterprise value of £963 million, predominantly accounting for expenses incurred to date—a calculated move by the German energy powerhouse.

When these three offshore wind farms finally breathe life, they will collectively generate an electrifying output capable of meeting the energy needs of a staggering four million average UK households, a testament to their status as one of the world's most monumental offshore wind ventures.

Tom Glover, RWE's UK country chair, hailed the UK's continued position as one of the firm's essential core markets worldwide.

"The timely and efficient deployment of offshore wind is essential to ensure the UK's domestic energy security, as well as achieving our net zero targets," he said.

"We very much welcome the UK government's recent decisions on future offshore wind auctions which provides us with the confidence to invest and represents a positive step in maximising the UK's clean energy potential, ensuring sustained and lowest prices for consumers and creating good quality jobs."

This transaction, a beacon of hope for the industry, awaits the imprimatur of regulatory approval and The Crown Estate during the first quarter of 2024. In the interim, Vattenfall will persevere in developing the Vanguard East and Vanguard West projects in anticipation of a seamless transition.

Confirming the deal, Vattenfall articulates its strategic intent, expressing that divesting these projects will bolster its capacity to invest in fossil-free endeavours, aligning more aptly with its overall portfolio and risk appetite. This decision follows the headwinds that saw the company report impairment costs earlier this year, a burden set to dissipate with the sale of the Norfolk offshore wind projects to RWE.

Importantly, Vattenfall underscores its unwavering commitment to the UK energy landscape, boasting a substantial 1.1GW portfolio of installed offshore and onshore wind capacity, including the 798MW Muir Mhor floating offshore wind farm currently unfolding off the enchanting east coast of Scotland in collaboration with Fred. Olsen Seawind. Additionally, Vattenfall is actively nurturing a pipeline of 500MW onshore wind projects and heat networks, a testament to its profound investment in the UK.

Anna Borg, Vattenfall AB's CEO, said the deal with RWE was "great news for the UK's energy security" to ensure the development of the three offshore wind projects, securing jobs and investment into the country.

"The Norfolk Offshore Wind Zone is incredibly important for the energy transition and reaching net zero," she said.

"Both the UK and the offshore market remain attractive over the long term, and we will focus our offshore investments in projects which are appropriate to our current risk appetite while continuing to operate and grow our existing fleet of assets." 

This momentous announcement dovetails seamlessly with the recent revelation that Ørsted has given the green light to the 2.9GW Hornsea 3 offshore wind project in the North Sea, poised to become the world's largest upon completion in 2027.

As RWE charts a course to invest €55 billion between 2024 and 2030 to nurture its green portfolio, poised to exceed 65GW, this acquisition is a testament to its unwavering commitment to a greener future. With ten operational offshore wind farms in the UK and a constellation of nine projects in development, including those in Norfolk's Offshore Wind Zone and the 1.4GW Sofia offshore wind endeavour in the North Sea, RWE's vision for a sustainable tomorrow is resoundingly clear.

Dan McGrail, the Chief Executive of RenewableUK, applauds RWE's acquisition of these "massive" Norfolk projects, a triumphant moment that, coupled with Ørsted's groundbreaking announcement, signifies an emphatic vote of confidence in Britain's burgeoning offshore wind industry. It promises billions in private investment, buttressing energy security and delivering cost-effective power to consumers for years. It appears Britain is resolutely reclaiming its throne as the preeminent market for offshore wind investment, transcending the challenges of recent times.

In a parallel development in the offshore wind arena, TotalEnergies has sealed a deal to divest a 25.5 per cent stake in the Seagreen offshore wind farm off the Scottish coast to Thailand's PTTEP, a transaction valued at $689 million. This strategic partnership, valuing Seagreen at $4.3 billion, propels the project toward new horizons, with PTTEP and TotalEnergies assuming a 25.5 per cent ownership alongside SSE Renewables' existing 49 per cent stake. Seagreen, the world's deepest fixed-bottom wind farm, is a testament to human ingenuity, boasting a colossal power generation capacity exceeding 1GW, destined to electrify over 1.6 million average homes.

"After a long partnership in gas production in Thailand, we are delighted to welcome PTTEP as a new shareholder in Seagreen's offshore wind farm alongside SSE, a first in our collaboration with PTTEP in renewable energy," said Patrick Pouyanné, chairman and CEO of TotalEnergies.

In the dynamic world of offshore wind, change is the only constant, and these developments underscore the industry's relentless pursuit of a cleaner, greener future.


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