Pension firm divests Ørsted wind farm stake with "significant proceed"

Danish pension company PKA has apparently scored a proceed of roughly DKK 200m from divesting its quarter stake in the extension of British offshore wind farm Burbo Bank. The sale doesn't represent a new investment strategy, underscores CEO Jon Johnsen. (Corrected).
Photo: MHI Vestas
Photo: MHI Vestas

(Correction 1 p.m. CET: the original version of this article's subheader claimed PKA's proceed to be roughly DKK 100m – not the correct sum of approximately DKK 187m. EnergyWatch apologizes for the error.)

Danish pension provider PKA has sold 25 percent interest in British offshore wind farm Burbo Bank Extension to asset manager Greencoat Wind UK Plc.

In 2016, the pension company invested DKK 3.3bn (EUR 440m) in the facility, developed by Ørsted and commissioned in the summer of 2017, now sold by PKA, which reports having scored a "significant proceed" from the sale.

The investment in the wind farm, which consists of 32 Vestas wind turbines generating power for 230,000 UK households, took place through PKA vestment platform AIP Management, which informs that the asset sold for GBP 400m.The pension company has thereby secured a direct return of around 16 percent, or DKK 184m. Adjusted for inflation since 2016, the real difference between purchase and sales price comes to approximately GBP 11m, however.

"When we invest in green infrastructure, we basically do so with a long-term horizon of 25-30 years. That's why it's also rare that we sell after only six years. Although in this case, we have received an offer providing an advantageous return for our members. So we decided to accept," writes PKA Chief Executive Jon Johnsen in the media release.

The pension company doesn't disclose the sales price, however, one of the two Greencoat funds, Greencoat UK Wind Plc, has – owing to the fact that it's publicly listed and is introducing a capital-raising round to finance the acquisition. Here, the price is revealed in a stock exchange notice to be GBP 250m paid for 15.7 percent interest in Burbo Bank.

"We are maintaining our strategy of investing in projects that increase the volume of renewable energy as well as making [green power] easier to utilize. We do so because it provides fine returns and also accommodates our members' interest in making a positive difference for climate. The proceed made from the Burbo sale will be reinvested in new and more efficient projects related to climate," Johnsen says.

Although in the meantime, the pension firm has been collecting revenue from power sales. At a fixed rate of GBP 150 per MWh in 2012 prices, Burbo Bank Extension is one of the most heavily subsidized offshore wind farms in the UK. The current value of the power price contract with British public authorities is GBP 176.57 per MWh, thereby making the facility one of relatively few European renewable energy installations getting more money from its output than otherwise would be entailed by historically high electricity fares.

Fixed rates of such caliber have long been a relic of the past both in the UK as well as most other places around the world. The divestment, though, is by no means an expression of PKA moving away from renewables, Johnsen underscores.

Roughly DKK 35bn, equating to more than 10 percent of PKA's total managed pension assets, are investments in climate-related projects.

50 percent of Burbo Bank Extension is owned by Ørsted, while the remaining 25 percent interest is held by investment manager Kirkbi.

(This article is provided by our sister media, FinansWatch, with price information added by EnergyWatch)

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