Can EDPR and Engie challenge offshore wind leaders?

The two utilities are set to put together their offshore wind assets and projects in a new and as-yet-unnamed joint venture, starting with a total of 1.5GW under construction and 4GW under development.

Ilaria Valtimora
June 7, 2019
Can EDPR and Engie challenge offshore wind leaders?

Offshore wind is a playground where you’ll struggle to compete if you’re not one of the big boys of the utility world. But, even if you are, sometimes that’s not enough.

This is why last month French utility Engie and Portuguese utility EDP Renewables decided to combine their offshore efforts, with the aim to become the second-largest developer in the industry by 2025.

The two utilities are set to put together their offshore wind assets and projects in a new and as-yet-unnamed joint venture, starting with a total of 1.5GW under construction and 4GW under development. Their target is to reach up to 7GW of projects in operation or under construction, and up to 10GW under development by 2025.

The joint venture is set to focus on developing new projects and then sell minority stakes to investors once they are under construction. The partners are looking to benefit from sharing the risks of early stage development, and then recycle capital to invest in new projects when construction is underway. The new company will be headed by Spyros Martinis Spettel, who currently runs EDP’s offshore wind business – and is speaking at our Financing Wind Europe conference in London on 31st October, along with an offshore wind specialist from Engie.

The two companies have been looking at ways to combine their operations for a while now.

Engie and EDP have been partnering on offshore wind projects since 2013, when they joined forces to bid for two French offshore wind projects, which are still under development. They currently work together on six offshore wind farms, including two floating projects off the coast of Portugal and France. They are also bidding for a further 600MW in Dunkirk, France.

And this offshore relationship though could extend even further.

Last June, Engie reportedly considered a bid for taking over EDP Renewables, following the news that China Three Gorges had launched a €9bn bid to take over the whole Portuguese utility. At that time, Engie denied that it was preparing a takeover bid for EDPR but said it is constantly assessing opportunities. Now CTG’s bid is floundering, this might be one.

The new partnership makes a lot of sense for Engie. Its CEO Isabelle Kocher said in London in February that Engie is set to exit about 20 countries in the next three years to target new markets in developed nations. It is set to focus on three main areas: western Europe, North America and some Asian nations. She also said that, while she was very conservative about big M&A deals, she would consider one if it could boost Engie’s strategy.

EDPR would be an appealing target. For example, this partnership is a chance for Engie to enter the promising North American offshore market, where EDP paid $135m in partnership with Shell New Energies for the right to develop a zone off Massachusetts for up to 1.6GW.

We wouldn’t be surprised if this partnership leads to a bigger investment by Engie in EDPR. Engie grew in North American onshore wind last year by buying Infinity Renewables. With almost 6GW of installed renewables in North America, EDPR would be a good target for the French utility if it wanted to further expand its presence there.

And what does the addition of a new large player mean for offshore wind?

Well, it continues a trend that we’ve already seen. Falling costs and bigger projects require developers to have stronger balance sheets to take the risk. It’s a capital-intensive business.

Currently, Danish utility Orsted is dominating the offshore wind market worldwide, with 3GW of offshore wind capacity at the end of 2018. E.On, Vattenfall and Innogy follow with over 1GW each, and so adding another large well-capitalised player shouldn’t fundamentally alter the picture, although EDPR and Engie’s focus on floating projects could spice things up.

However, if this joint venture can take market share from those leading players then Engie might look to take its relationship with EDPR one step further.

Offshore wind is a playground where you’ll struggle to compete if you’re not one of the big boys of the utility world. But, even if you are, sometimes that’s not enough.

This is why last month French utility Engie and Portuguese utility EDP Renewables decided to combine their offshore efforts, with the aim to become the second-largest developer in the industry by 2025.

The two utilities are set to put together their offshore wind assets and projects in a new and as-yet-unnamed joint venture, starting with a total of 1.5GW under construction and 4GW under development. Their target is to reach up to 7GW of projects in operation or under construction, and up to 10GW under development by 2025.

The joint venture is set to focus on developing new projects and then sell minority stakes to investors once they are under construction. The partners are looking to benefit from sharing the risks of early stage development, and then recycle capital to invest in new projects when construction is underway. The new company will be headed by Spyros Martinis Spettel, who currently runs EDP’s offshore wind business – and is speaking at our Financing Wind Europe conference in London on 31st October, along with an offshore wind specialist from Engie.

The two companies have been looking at ways to combine their operations for a while now.

Engie and EDP have been partnering on offshore wind projects since 2013, when they joined forces to bid for two French offshore wind projects, which are still under development. They currently work together on six offshore wind farms, including two floating projects off the coast of Portugal and France. They are also bidding for a further 600MW in Dunkirk, France.

And this offshore relationship though could extend even further.

Last June, Engie reportedly considered a bid for taking over EDP Renewables, following the news that China Three Gorges had launched a €9bn bid to take over the whole Portuguese utility. At that time, Engie denied that it was preparing a takeover bid for EDPR but said it is constantly assessing opportunities. Now CTG’s bid is floundering, this might be one.

The new partnership makes a lot of sense for Engie. Its CEO Isabelle Kocher said in London in February that Engie is set to exit about 20 countries in the next three years to target new markets in developed nations. It is set to focus on three main areas: western Europe, North America and some Asian nations. She also said that, while she was very conservative about big M&A deals, she would consider one if it could boost Engie’s strategy.

EDPR would be an appealing target. For example, this partnership is a chance for Engie to enter the promising North American offshore market, where EDP paid $135m in partnership with Shell New Energies for the right to develop a zone off Massachusetts for up to 1.6GW.

We wouldn’t be surprised if this partnership leads to a bigger investment by Engie in EDPR. Engie grew in North American onshore wind last year by buying Infinity Renewables. With almost 6GW of installed renewables in North America, EDPR would be a good target for the French utility if it wanted to further expand its presence there.

And what does the addition of a new large player mean for offshore wind?

Well, it continues a trend that we’ve already seen. Falling costs and bigger projects require developers to have stronger balance sheets to take the risk. It’s a capital-intensive business.

Currently, Danish utility Orsted is dominating the offshore wind market worldwide, with 3GW of offshore wind capacity at the end of 2018. E.On, Vattenfall and Innogy follow with over 1GW each, and so adding another large well-capitalised player shouldn’t fundamentally alter the picture, although EDPR and Engie’s focus on floating projects could spice things up.

However, if this joint venture can take market share from those leading players then Engie might look to take its relationship with EDPR one step further.

Offshore wind is a playground where you’ll struggle to compete if you’re not one of the big boys of the utility world. But, even if you are, sometimes that’s not enough.

This is why last month French utility Engie and Portuguese utility EDP Renewables decided to combine their offshore efforts, with the aim to become the second-largest developer in the industry by 2025.

The two utilities are set to put together their offshore wind assets and projects in a new and as-yet-unnamed joint venture, starting with a total of 1.5GW under construction and 4GW under development. Their target is to reach up to 7GW of projects in operation or under construction, and up to 10GW under development by 2025.

The joint venture is set to focus on developing new projects and then sell minority stakes to investors once they are under construction. The partners are looking to benefit from sharing the risks of early stage development, and then recycle capital to invest in new projects when construction is underway. The new company will be headed by Spyros Martinis Spettel, who currently runs EDP’s offshore wind business – and is speaking at our Financing Wind Europe conference in London on 31st October, along with an offshore wind specialist from Engie.

The two companies have been looking at ways to combine their operations for a while now.

Engie and EDP have been partnering on offshore wind projects since 2013, when they joined forces to bid for two French offshore wind projects, which are still under development. They currently work together on six offshore wind farms, including two floating projects off the coast of Portugal and France. They are also bidding for a further 600MW in Dunkirk, France.

And this offshore relationship though could extend even further.

Last June, Engie reportedly considered a bid for taking over EDP Renewables, following the news that China Three Gorges had launched a €9bn bid to take over the whole Portuguese utility. At that time, Engie denied that it was preparing a takeover bid for EDPR but said it is constantly assessing opportunities. Now CTG’s bid is floundering, this might be one.

The new partnership makes a lot of sense for Engie. Its CEO Isabelle Kocher said in London in February that Engie is set to exit about 20 countries in the next three years to target new markets in developed nations. It is set to focus on three main areas: western Europe, North America and some Asian nations. She also said that, while she was very conservative about big M&A deals, she would consider one if it could boost Engie’s strategy.

EDPR would be an appealing target. For example, this partnership is a chance for Engie to enter the promising North American offshore market, where EDP paid $135m in partnership with Shell New Energies for the right to develop a zone off Massachusetts for up to 1.6GW.

We wouldn’t be surprised if this partnership leads to a bigger investment by Engie in EDPR. Engie grew in North American onshore wind last year by buying Infinity Renewables. With almost 6GW of installed renewables in North America, EDPR would be a good target for the French utility if it wanted to further expand its presence there.

And what does the addition of a new large player mean for offshore wind?

Well, it continues a trend that we’ve already seen. Falling costs and bigger projects require developers to have stronger balance sheets to take the risk. It’s a capital-intensive business.

Currently, Danish utility Orsted is dominating the offshore wind market worldwide, with 3GW of offshore wind capacity at the end of 2018. E.On, Vattenfall and Innogy follow with over 1GW each, and so adding another large well-capitalised player shouldn’t fundamentally alter the picture, although EDPR and Engie’s focus on floating projects could spice things up.

However, if this joint venture can take market share from those leading players then Engie might look to take its relationship with EDPR one step further.

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