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Keppel Corporation and Keppel Infrastructure jointly invest in Borkum Riffgrund 2

By: Tom Russell 12/08/2022 Keppel Corporation

General Windfarms

Keppel Corporation Limited (Keppel Corporation) and Keppel Infrastructure Fund Management Pte Ltd (KIFM), the Trustee-Manager of Keppel Infrastructure Trust (KIT), announced that they are jointly investing €305 million to acquire a 50.01% stake in a special purpose vehicle (SPV) that holds 50% of Borkum Riffgrund 2 (BKR2), an offshore wind farm in Germany.

The SPV is currently wholly owned by Gulf International Holding Pte. Ltd., a subsidiary of Gulf Energy Development Public Company Limited (Gulf), one of Thailand’s largest private power producers. Post-acquisition, Gulf will retain a 49.99% stake in the SPV. Offshore wind developer Ørsted owns the remaining 50% stake.

Fully operational since 2019, BKR2 has an operating capacity of approximately 465 MW and is located 59km off the coast of Lower Saxony in the North Sea, Germany, which is an area with high wind availability as reflected in the high average historical capacity factors of more than 40%. The region is next to the Wadden Sea, an UNESCO World Heritage site. Hence, it is unlikely for wind farms to be built at the Wadden Sea, mitigating potential reduction in wind availability to BKR2.

BKR2 operates under the German EEG 2014 market premium mechanism, which has an attractive Feed-in-Tariff and guaranteed floor price till 2038. The project also holds a 20-year power purchase agreement and a 20-year operations and maintenance agreement (OMA), until 2038, with Ørsted.

Mr Loh Chin Hua, CEO of Keppel Corporation, said, “The demand for renewable energy is expected to intensify as the world journeys towards its net zero goal. We are pleased to strengthen our partnership with best-in-class partners such as Gulf and Ørsted through this transaction, and look forward to future collaboration opportunities. This transaction is aligned with Keppel’s Vision 2030, which see renewables, clean energy and decarbonisation solutions playing increasingly integral roles as we make sustainability our business. It also demonstrates how we can harness the Group’s eco-system and business networks to source for and capture opportunities to scale up in our focus areas and grow recurring income.”

Mr Jopy Chiang, CEO of KIFM, said, “This transaction marks KIT’s first investment in the offshore wind sector, and our second investment in the European renewable energy market, further reinforcing our strategy to grow our Energy Transition segment and almost tripling KIT’s renewable energy portfolio to over 700 MW. Underpinned by favourable tailwinds such as energy security, electrification and higher projected demand for green energy in the future, this investment underscores the global acceleration towards decarbonisation and net-zero. The Trust will continue to make inroads to capture more opportunities in the renewable energy sector, in support of our ESG target.”

The transaction is expected to be completed in the fourth quarter of 2022. KIFM intends to fund the investment with an optimal combination of internal sources of funds, equity and/or debt capital market issuances and/or external borrowings. Keppel Corporation, through its wholly owned subsidiary, KRI, will also fund its share of the investment by way of capital contributions to the joint venture. Upon completion of the transaction, KIT’s assets under management will grow from S$4.7 billion as at 30 June 2022 to approximately S$5.0 billion. Including the investment in the onshore wind assets in Sweden and Norway announced on 13 July 2022, as well as the investment in Eco Management Korea announced on 8 August 2022, KIT's assets under management will grow to approximately S$6.1 billion.

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Keppel Corporation and Keppel Infrastructure jointly invest in Borkum Riffgrund 2

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