Corporate M&A in Q4: Statkraft moves into offshore again

The consolidation activity that kept companies in the wind sector busy in the first three quarters of 2018 continued in the last three months...

Richard Heap
January 9, 2019
Corporate M&A in Q4: Statkraft moves into offshore again

The consolidation activity that kept companies in the wind sector busy in the first three quarters of 2018 continued in the last three months, with deals finalised by firms including Ørsted, Statkraft, and Canada’s AIMCo. Here are the key ones:

Corporate M&A Deals in Wind in Q4 2018

* Transactions converted to € for ease of comparison


The reasons for this activity are well-known. Investors including infrastructure funds, pension funds, insurers, and utilities are looking to acquire wind developers as a way to expand fast in target markets, while also creating their own ability to keep growing.

The acquisition of Element Power’s onshore wind arm in the UK and Ireland by Norwegian utility Statkraft is a very good example of how this trend is continuing, while also raising an intriguing question about the Norwegian firm’s offshore wind plans.

Statkraft’s expansion plans

Statkraft has had a busy 12 months. After selling out of the capital-intensive offshore wind business in 2017, the company concluded a series of significant growth deals in 2018.

These included power purchase agreements in Ireland, Germany and Sweden; the buyout of the 38% of onshore wind developer SAE Vind that it didn’t own; and finally, the takeover of Element Power’s wind arm in the UK and Ireland in October. Around 50 former Element employees have now moved into Statkraft.

This latter deal bolsters the Norwegian firm’s operations in the UK and Ireland.

Statkraft already had a portfolio of 11 operational onshore wind farms in the UK and the Nordics with a combined capacity of 1GW, and a stake in the 1GW Fosen project in Norway that is under construction. The acquisition of Element’s UK and Irish arm added to that with 1.3GW of under-development wind projects in Ireland, including the 750MW North Irish Sea Array offshore wind farm, and 250MW in the UK.

This grew Statkraft’s portfolio of operational and development-stage projects to 3.6GW, and is a big step in its plan to expand its wind portfolio to 6GW by 2025.

Christian Rynning-Tonnesen, CEO at Statkraft, said the deal with Element would “strengthen Statkraft’s capabilities in project development, construction and commercial management in the UK and Ireland, as well as across markets”.

It has also taken Statkraft back into the offshore wind sector that it only recently exited. The utility decided that offshore wind was too capital-intensive in established countries including the UK, where competition is fierce and big players dominate. So does this indicate Statkraft has had a change of heart? We don't think so, as little has changed in the wider market.

However, with offshore wind in its infancy in Ireland, the Element deal offers it an opportunity to break into that market again if it wants – or to develop the project and sell to a larger rival in future. It has given little public clarity or explanation thus far about the approach it favours.

Ireland and offshore wind

And why Ireland? Element Power’s CEO Mike O’Neill explained to us after the deal that acquisitions of local developers represented an opportunity for “thirsty investors” to step into highly-competitive markets. In this sense, the move to establish a presence in the Republic of Ireland by Statkraft is very timely.

In September, the Irish government approved a much-needed renewable energy support scheme, which introduced an auction system to back projects including onshore and offshore wind farms. The first RESS auction is due this year.

This renewed focus on offshore wind in Ireland comes because, over the past few years, the country become very reliant on onshore wind farms to reach its 2020 target of 40% electricity from renewable sources. As a consequence, other technologies such as offshore wind have been neglected for being too expensive compared to onshore wind.

This has also sparked a backlash from local opponents of onshore wind, and the Irish Independent reported last year that around two-thirds of new wind projects were involved in legal battles. By buying Element’s expertise, Statkraft has the ability to negotiate the opportunities and pitfalls of this process, and carve out a new opportunity offshore.

After such a high-profile exit from offshore in 2017, its approach there will be intriguing. And we’ll keep an eye out for further M&A deals from the Norwegian firm this year.

The consolidation activity that kept companies in the wind sector busy in the first three quarters of 2018 continued in the last three months, with deals finalised by firms including Ørsted, Statkraft, and Canada’s AIMCo. Here are the key ones:

Corporate M&A Deals in Wind in Q4 2018

* Transactions converted to € for ease of comparison


The reasons for this activity are well-known. Investors including infrastructure funds, pension funds, insurers, and utilities are looking to acquire wind developers as a way to expand fast in target markets, while also creating their own ability to keep growing.

The acquisition of Element Power’s onshore wind arm in the UK and Ireland by Norwegian utility Statkraft is a very good example of how this trend is continuing, while also raising an intriguing question about the Norwegian firm’s offshore wind plans.

Statkraft’s expansion plans

Statkraft has had a busy 12 months. After selling out of the capital-intensive offshore wind business in 2017, the company concluded a series of significant growth deals in 2018.

These included power purchase agreements in Ireland, Germany and Sweden; the buyout of the 38% of onshore wind developer SAE Vind that it didn’t own; and finally, the takeover of Element Power’s wind arm in the UK and Ireland in October. Around 50 former Element employees have now moved into Statkraft.

This latter deal bolsters the Norwegian firm’s operations in the UK and Ireland.

Statkraft already had a portfolio of 11 operational onshore wind farms in the UK and the Nordics with a combined capacity of 1GW, and a stake in the 1GW Fosen project in Norway that is under construction. The acquisition of Element’s UK and Irish arm added to that with 1.3GW of under-development wind projects in Ireland, including the 750MW North Irish Sea Array offshore wind farm, and 250MW in the UK.

This grew Statkraft’s portfolio of operational and development-stage projects to 3.6GW, and is a big step in its plan to expand its wind portfolio to 6GW by 2025.

Christian Rynning-Tonnesen, CEO at Statkraft, said the deal with Element would “strengthen Statkraft’s capabilities in project development, construction and commercial management in the UK and Ireland, as well as across markets”.

It has also taken Statkraft back into the offshore wind sector that it only recently exited. The utility decided that offshore wind was too capital-intensive in established countries including the UK, where competition is fierce and big players dominate. So does this indicate Statkraft has had a change of heart? We don't think so, as little has changed in the wider market.

However, with offshore wind in its infancy in Ireland, the Element deal offers it an opportunity to break into that market again if it wants – or to develop the project and sell to a larger rival in future. It has given little public clarity or explanation thus far about the approach it favours.

Ireland and offshore wind

And why Ireland? Element Power’s CEO Mike O’Neill explained to us after the deal that acquisitions of local developers represented an opportunity for “thirsty investors” to step into highly-competitive markets. In this sense, the move to establish a presence in the Republic of Ireland by Statkraft is very timely.

In September, the Irish government approved a much-needed renewable energy support scheme, which introduced an auction system to back projects including onshore and offshore wind farms. The first RESS auction is due this year.

This renewed focus on offshore wind in Ireland comes because, over the past few years, the country become very reliant on onshore wind farms to reach its 2020 target of 40% electricity from renewable sources. As a consequence, other technologies such as offshore wind have been neglected for being too expensive compared to onshore wind.

This has also sparked a backlash from local opponents of onshore wind, and the Irish Independent reported last year that around two-thirds of new wind projects were involved in legal battles. By buying Element’s expertise, Statkraft has the ability to negotiate the opportunities and pitfalls of this process, and carve out a new opportunity offshore.

After such a high-profile exit from offshore in 2017, its approach there will be intriguing. And we’ll keep an eye out for further M&A deals from the Norwegian firm this year.

The consolidation activity that kept companies in the wind sector busy in the first three quarters of 2018 continued in the last three months, with deals finalised by firms including Ørsted, Statkraft, and Canada’s AIMCo. Here are the key ones:

Corporate M&A Deals in Wind in Q4 2018

* Transactions converted to € for ease of comparison


The reasons for this activity are well-known. Investors including infrastructure funds, pension funds, insurers, and utilities are looking to acquire wind developers as a way to expand fast in target markets, while also creating their own ability to keep growing.

The acquisition of Element Power’s onshore wind arm in the UK and Ireland by Norwegian utility Statkraft is a very good example of how this trend is continuing, while also raising an intriguing question about the Norwegian firm’s offshore wind plans.

Statkraft’s expansion plans

Statkraft has had a busy 12 months. After selling out of the capital-intensive offshore wind business in 2017, the company concluded a series of significant growth deals in 2018.

These included power purchase agreements in Ireland, Germany and Sweden; the buyout of the 38% of onshore wind developer SAE Vind that it didn’t own; and finally, the takeover of Element Power’s wind arm in the UK and Ireland in October. Around 50 former Element employees have now moved into Statkraft.

This latter deal bolsters the Norwegian firm’s operations in the UK and Ireland.

Statkraft already had a portfolio of 11 operational onshore wind farms in the UK and the Nordics with a combined capacity of 1GW, and a stake in the 1GW Fosen project in Norway that is under construction. The acquisition of Element’s UK and Irish arm added to that with 1.3GW of under-development wind projects in Ireland, including the 750MW North Irish Sea Array offshore wind farm, and 250MW in the UK.

This grew Statkraft’s portfolio of operational and development-stage projects to 3.6GW, and is a big step in its plan to expand its wind portfolio to 6GW by 2025.

Christian Rynning-Tonnesen, CEO at Statkraft, said the deal with Element would “strengthen Statkraft’s capabilities in project development, construction and commercial management in the UK and Ireland, as well as across markets”.

It has also taken Statkraft back into the offshore wind sector that it only recently exited. The utility decided that offshore wind was too capital-intensive in established countries including the UK, where competition is fierce and big players dominate. So does this indicate Statkraft has had a change of heart? We don't think so, as little has changed in the wider market.

However, with offshore wind in its infancy in Ireland, the Element deal offers it an opportunity to break into that market again if it wants – or to develop the project and sell to a larger rival in future. It has given little public clarity or explanation thus far about the approach it favours.

Ireland and offshore wind

And why Ireland? Element Power’s CEO Mike O’Neill explained to us after the deal that acquisitions of local developers represented an opportunity for “thirsty investors” to step into highly-competitive markets. In this sense, the move to establish a presence in the Republic of Ireland by Statkraft is very timely.

In September, the Irish government approved a much-needed renewable energy support scheme, which introduced an auction system to back projects including onshore and offshore wind farms. The first RESS auction is due this year.

This renewed focus on offshore wind in Ireland comes because, over the past few years, the country become very reliant on onshore wind farms to reach its 2020 target of 40% electricity from renewable sources. As a consequence, other technologies such as offshore wind have been neglected for being too expensive compared to onshore wind.

This has also sparked a backlash from local opponents of onshore wind, and the Irish Independent reported last year that around two-thirds of new wind projects were involved in legal battles. By buying Element’s expertise, Statkraft has the ability to negotiate the opportunities and pitfalls of this process, and carve out a new opportunity offshore.

After such a high-profile exit from offshore in 2017, its approach there will be intriguing. And we’ll keep an eye out for further M&A deals from the Norwegian firm this year.

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