Offshore Wind
Creating clean energy for millions of homes
InfraRed is the investment manager of the largest UK-listed diversified renewables investment company. Since 2017, we have been increasing its investment into offshore wind – targeting the two largest offshore wind markets in the world, the UK and Germany, in assets which create clean energy for millions of homes.
Investment
In 2017, as the investment manager of this listed diversified renewables investment company, we acquired a 14.7% indirect equity interest in the Sheringham Shoal Offshore Wind Farm. This wind farm in the UK North Sea, off the Norfolk coast, was the company’s first allocation to the offshore wind sector. Just two years later, it acquired stakes in two more offshore assets in the German North Sea – a 25% indirect equity interest in Gode Wind 1 and a 36% equity interest in Merkur Offshore, incrementally increased over the course of two transactions.
In 2021, it acquired stakes in two more UK North Sea assets – Beatrice Offshore Wind Farm (17.5%) off the northeast coast of Scotland, and East Anglia One (14.3%) off the coast of Suffolk, England. In terms of capacity, these two projects provide enough clean energy to power the equivalent of more than 1 million homes.
Then in 2022, over the course of two transactions, the company acquired a 10.2% interest in Hornsea One. With a generation capacity of 1.2GW and covering an area of 407km2, the project off the UK’s Yorkshire coast was the largest operational offshore wind farm in the world at the time of acquisition, and generates enough green energy to power over 1 million homes.
Following this latest transaction, the company is invested in two of the five largest operational offshore wind farms in the UK – including one of the world’s largest operational offshore wind farms, Hornsea One – making it a significant investor in key assets for UK energy security and decarbonisation.
Initial investment
2017
Theme
Energy Transition & Renewables
Strategy
Core Energy
Country
UK & Germany
Case study Key statistics
Impact
These investments showcase our experience in sourcing and transacting on large offshore wind projects. The projects are enormous and require capabilities in technical due diligence, financial structuring and negotiating strong governance positions.
All six offshore wind projects in the company’s portfolio benefit from protected cash flows, linked to government support arrangements. This reduces the sensitivity of their equity returns to changes in power price levels. And in turn, help us to add unsubsidised projects with higher-returning potential into the portfolio. This allows us – as the investment manager – to balance subsidised and unsubsidised revenues to deliver a consistent risk profile, while supporting the energy transition.
These investments are also a good example of our active approach to asset management. Historically, we have looked to achieve at least a majority equity ownership of assets. However, as renewable energy projects increase in size, particularly offshore wind, we are increasingly looking to acquire minority equity stakes. Where minority positions have been taken, we have secured shareholder rights (including voting rights) through shareholder agreements and other transaction documentation, allowing us to exercise a degree of control to protect our interests.
“These investments, particularly the latest investments into Hornsea One, are a strong example of InfraRed’s investment strategy – re-investing retained profits into high quality renewables; making a significant contribution to European energy security and decarbonisation targets.”
* Based on average regional household electricity consumption figures
** Based on the IFI Approach to GHG Accounting for Renewable Energy
