TenneT has entered into a partnership with Mitsubishi Corporation by agreeing to sell a 49% equity stake in two German offshore high-voltage cable projects, BorWin1 and BorWin2.
Mitsubishi’s aggregate equity commitment will total EUR 240 million. This partnership represents a milestone transaction in Germany, allowing infrastructure investors to invest in separate clusters of regulated assets.
The two grid connections connect a number of offshore wind farms in the German North Sea to the onshore electricity grid and have a combined total capacity of 1,200 megawatt. The equity contribution of Mitsubishi represents 20% of the expected combined capital expenditures of approximately EUR 1.2 billion for these two projects. TenneT will retain majority ownership and will continue to operate the connections.
The underlying regulatory structure has been developed by TenneT in cooperation with the German regulator (Bundesnetzagentur). The transaction is still subject to certain conditions, which are expected to be met before the Summer, and has been approved by TenneT’s sole shareholder, the Dutch State.
Mel Kroon, CEO TenneT, regards the agreement as an essential step for the successful integration of renewable energy: “TenneT is making exceptional efforts in the connection of offshore wind energy in Germany. Currently we are working on nine projects to connect wind farms in the German North Sea. These projects total to 5,000 megawatt of renewable electricity, enough energy to supply 5 million households. This long-term partnership with Mitsubishi Corporation is both a logical and important step in our considerable contribution to the transition to a sustainable energy supply.”
Eelco de Boer, CFO TenneT : “With this agreement, TenneT fulfils all of last year’s equity raising promises to the financial markets. This transaction demonstrates that these offshore projects are a sound investment under current circumstances in the financial markets.
Deutsche Bank, RBS and Freshfields acted as advisers for TenneT. Mitsubishi’s primary advisers were KPMG and Hogan Lovells.
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Offshore WIND staff, February 09, 2012; Image: tennet