Renewables Infrastructure raising cash to invest in Hornsea One – The Renewables Infrastructure Group has exchanged contracts to acquire a 7.8% equity interest in the Hornsea One offshore wind farm in the UK from Global Infrastructure Partners. Following completion of the transaction, which is expected to take place at the end of H1 2022, Hornsea One will represent approximately 8% of the portfolio.
World’s largest offshore wind farm
Hornsea One benefits from an inflation-linked Contract-for-Difference (CfD) subsidy with 13 years remaining. It is the world’s largest operational offshore wind farm and covers an area of 407km2. The wind farm is located approximately 120km off the Yorkshire coast of England and has demonstrated strong operational performance since operations commenced in 2020. The project generates enough clean electricity to power 1m homes. The wind farm was developed and built by Orsted, utilising 174 Siemens 7MW turbines. Orsted operates the windfarm under a long-term operations and maintenance agreement.
Power prices and wind resource both positive
Production and captured power prices have been above budget in the two-month period to 28 February 2022, with particularly strong wind resource in February, and this is estimated to contribute an additional 1p/share to the NAV.
Power price forwards for 2022 and 2023 (and their volatility) have increased since those used in the valuation of the portfolio as at 31 December 2021. Approximately 30% of the revenues for 2022 of the underlying investments across the portfolio are not fixed and exposed to merchant power prices. Power prices are particularly volatile, however, were the increase in power price forwards since 31 December 2021 to 15 March 2022 used to calculate the NAV and generation is on budget for the remainder of 2022 and for 2023, the NAV might increase by a further 2 to 4p/share.
Debt facility
The ESG-linked Revolving Credit Facility (RCF) has been increased from £500m to £600m. The RCF is £73m drawn and covers the existing commitments relating to the construction of the Ranasjö, Salsjö and Grönhult windfarms and the Cadiz solar projects of £231m which become due over the next two years as well as the equity commitments to the Hornsea One transaction announced today and due on the completion of that acquisition. The RCF has an expiry date of 31 December 2023.
Fundraise
The company is issuing shares to professional investors via a bookbuild – where investors bid to buy shares through the company’s brokers (Investec and Liberum). The strike price will not be less than 130p. The actual number of shares to be issued hasn’t been decided yet. Retail investors can participate in the fundraise via a PrimaryBid Offer. The PrimaryBid Offer is expected to close on Thursday, 24 March 2022, at 11am, but may close early if it is oversubscribed. There is a minimum subscription of £250 per investor and the price per share will be set by the professional investor bookbuild.
TRIG : Renewables Infrastructure raising cash to invest in Hornsea One