'Scale is an important part of the filter' for further acquisitions: Orsted Onshore chief
Danish utility eyeing more large-scale assets in the range of 100MW in Europe as well as solar projects in the UK, Declan Flanagan tells Recharge
The offshore wind champion earlier today said it closed a deal to buy BRI’s UK and Ireland onshore wind portfolio of 389MW wind farms that are operating and under construction, 149MW in advanced development and a 1GW development pipeline.
“Scale is an important part of the filter” for Orsted when considering acquisitions, Declan Flanagan said in an interview. He added that one of the factors that got Orsted comfortable with Brookfield was that it has larger-scale projects in its portfolio, which in a European context already means 100MW or more.
“All other things equal, we still prefer to go to those areas where we can do larger” projects.
Orsted currently is growing at a “very nice pace” globally and doesn’t feel in any particular hurry in its ongoing expansion, Flanagan said, but added the company has firm views on all big European markets and is continuing to look at opportunities in many of them.
“There is nothing of scale that isn’t shown to us at Orsted anywhere in the world,” the self-confident onshore CEO said.
When evaluating opportunities across all markets, the company has also looked at other European markets, where larger wind farms are possible and sometimes are built on a merchant basis – such as Spain or the Nordics – and won’t rule anything out as long as it guarantees value creation.
Some of the larger European wind power markets - in particular Germany - due to a high population density don’t have much room for large wind power projects, though.
Another area Orsted will consider is “solar in a broader UK dimension,” Flanagan said.
“That is very similar to when Lincoln Clean Energy [in the US] became part of Orsted in 2018. We then moved aggressively into solar. That is one the growth option we see.”
The Brookfield portfolio Orsted is now in the process of acquiring is more weighted towards Ireland than Scotland (and not England), and within that towards larger scale projects, with a number in the 100MW range, he added.
“It is one of the things we liked about the platform that it has shown it can develop large-scale projects and has a history of doing so in Ireland and Scotland. And has got a pipeline more weighted towards the larger-end projects, which is a better a fit for us.”
Part of the advance development pipeline is a 120MW extension to the Kennoxhead wind farm in Scotland, and the 29MW Lisheen III project in Ireland.
Brookfield’s wider 1GW pipeline of less advanced developments includes a number of projects in a joint venture with Irish state forestry company Coillte, Flanagan revealed.
Orsted in 2018 took the decision to diversify from offshore wind and dedicate 15-20% of its growth investment into its new onshore portfolio. The Brookfield acquisition is still part of that plan, but the company at a June 2021 capital markets day will be going into more detail about its portfolio choices, Flanagan said.
(Copyright)