Orsted makes onshore move
Deal to acquire US renewables developer Lincoln Clean Energy for $580m
Orsted is to acquire US renewables developer Lincoln Clean Energy for about $580m, signalling a move into the onshore wind sector for the Danish energy company.
Lincoln Clean Energy has wind farms totalling 513MW operational, a further 300MW under construction and a pipeline of over 1.5GW to be completed by 2022. The portfolio also includes 10MW of solar power.
The existing management team will continue to run Lincoln Clean Energy, which will be a separate unit outside of Orsted's wind power business.
The transaction is subject to approval by the US competition authorities and is expected to close by the end of 2018.
Orsted chief executive Henrik Poulsen said: “The global market for onshore wind power is expected to grow significantly in the coming years, and the US is a leading onshore wind market.
“The acquisition of Lincoln Clean Energy will provide a strong growth platform in the US, which is one of Orsted's strategic growth markets. It is an investment case with healthy economics based on prudent assumptions about key value drivers and market developments.”
Lincoln Clean Energy CEO Declan Flanagan said: “The Lincoln team is excited to join Orsted and to work toward our shared goal of creating a world that runs entirely on green energy. This transaction will enhance our project execution and growth trajectory.”
Meanwhile, Orsted earnings in the first half of 2018 grew 11% to Dkr8.6bn (€1.3bn), compared with Dkr7.7bn in the same period in 2017.
The company said the increase was partly down to a strong showing in its wind power business.
Revenue from wind was up 34% to Dkr14.55bn from just over Dkr10.88bn in 2017. The company said power price increases in the UK helped boost the figures, as well as new subsidised wind farms in the UK and new O&M agreements.
Renewable generation accounted for 71% of the company's output in the first six months of 2018, up from 59% in 2017, Orsted said. This was driven by the ramp up of generation from the Race Bank and Walney 3 offshore wind farms.
Orsted said it expects to divest 50% of the 1.2GW Hornsea 1 offshore wind farm off the UK east coast during the second half of the year.
If the divestment occurs, earnings in the second half of 2018 are “expected to be significantly higher than the Dkr22.5bn achieved in 2017”, Orsted said.
Poulsen said: “We’re very satisfied with the first half of 2018. The solid results from our offshore wind business continued into the second quarter with increased earnings from our operating assets and continued strong progress on our construction projects.
“Assuming we take final investment decision on the awards in Taiwan and Germany, our total decided and installed capacity will reach 11.9GW by 2025.
“As announced in June, we’ve decided to initiate a process to divest our Danish power distribution and residential customer businesses to focus entirely on further expanding our position as a leading global renewable energy company.”