innogy strives for valuable growth in renewables:
Project pipeline of over 5,000 MW total capacity built
> Successful market entry in the USA and Ireland
> 400 MW onshore pipeline acquired in Germany
> Project rights for over 1,000 MW in solar secured
> Growth investments subject to financing capacity andinnogy’s hurdle rate framework
With some 1,000 megawatts (MW) of installed capacity (pro-rata), innogy is one of the world’s leading operators of offshore wind farms and, with an installed capacity of some 1,800 MW (pro-rata), one of the largest operators of onshore wind farms in Europe. That is sufficient to supply the equivalent of around 2.5 million households p.a. with green electricity. The company intends to expand on this solid foundation by entering new markets and by large-scale photovoltaic projects. innogy currently has a significant project pipeline of over 5,000 MW in renewable energies.
“We have optimally positioned our renewables business. Not only are we continually increasing the performance of our existing plants, but we are constantly looking for new value-accretive growth options – including in new markets. Many countries outside Europe still have considerable catching up to do when it comes to generating electricity using renewable resources. At the same time, our established core markets in Europe continue to offer opportunities for growth."
“We have optimally positioned our renewables business,” said Hans Bünting, Chief Operating Officer Renewables of innogy SE. “Not only are we continually increasing the performance of our existing plants, but we are constantly looking for new value-accretive growth options – including in new markets. Many countries outside Europe still have considerable catching up to do when it comes to generating electricity using renewable resources. At the same time, our established core markets in Europe continue to offer opportunities for growth. However, competition has clearly increased following the introduction of auctions and tender procedures.” According to Hans Bünting, partnerships will play a key role in many future projects. “We are looking for suitable partners with whom we can successfully realise major projects together. Both majority and minority shareholdings are possible options. This model has already proven very successful at innogy,” Bünting said.
In addition to meeting its internal hurdle rate framework, innogy will assess all options regarding ownership and financing structure when implementing new projects in order to maximise value for the company and its shareholders. One growth project is the 860 MW Triton Knoll offshore wind project in the UK, for which innogy received a Contract for Difference in the last auction round. The company has also entered the Irish market through its acquisition of the Dromadda Beg onshore wind project (10.2 MW). Consented in 2014, the site’s three turbines are being installed in the Republic of Ireland’s County Kerry in the country’s southwest. Building began in September 2017 and final commissioning is planned for the second half of 2018.
Additional growth opportunities have recently been secured by the agreement innogy signed at the end of 2017 to acquire an onshore-wind pipeline with 2,000 MW total capacity in the United States and by a cooperation agreement with Regensburg-based onshore developer Primus Energie for a 400 MW wind project pipeline in Thuringia, Germany.The pipeline agreement in the US includes more than 20 projects in various phases of development; these include projects with more than 500 MW in advanced development stages which are set to be commissioned by 2020. Acquisition of the pipeline is subject to approval by the US government’s interdepartmental Committee on Foreign Investment in the United States (CFIUS). Closing of the transaction is expected in the second quarter of 2018.
“The US market is one of our key strategic growth areas for renewables,” said Bünting. “Establishing our subsidiary, Innogy Renewables US, in 2016 was our first step towards entering this market. The acquisition of EverPower’s impressive pipeline is another logical step for achieving long-term growth in the United States. Here, too, we will only invest in projects that will allow us to sustainably create value in line with our financial targets.”
With this expansion strategy, innogy is continuing last year’s successful performance in the Renewables division. In 2017, the company had some 1,000 MW in wind power under construction, resulting in 200 new wind turbines which either produced electricity for the first time last year or which will be commissioned early in 2018. These included the offshore wind farm Nordsee One (332 MW), which started commercial operations at the end of 2017, the indeland wind farm Eschweiler (41.6 MW) which innogy realised together with municipal partners, and the Galloper offshore wind farm (353 MW), a further project realised together with partners. These projects have allowed innogy to expand its portfolio and secure its market position long-term.
Portfolio expanded by utility-scale solar projects
innogy will continue investing in the area of solar. In addition to electromobility and broadband expansion, photovoltaics is one of the key areas for growth in new business fields. Thanks to its subsidiary BELECTRIC innogy has one of the leading specialists for building utility-scale solar power plants and battery storage systems in its portfolio. Hans Bünting: “Photovoltaics is one of the fastest-growing technologies in the energy sector and has even become profitable without subsidies in many markets. innogy wants to be a part of this growth market. In terms of our solar investments, BELECTRIC is our partner of choice for developing projects, technical design and for constructing and operating plants. That gives us the chance to grow successfully across the entire solar value chain.”
In terms of investments in solar, innogy is actively developing projects in North America, Germany and the Netherlands. The company has also already secured a foothold in the Canadian solar market by signing an agreement with a Canadian developer for projects with a capacity of over 1,000 MW. The focus this year will be on developing projects from the pipeline of up to 260 MW. In Germany, the company has won a tendering process with two projects of 10 MW each and developed 750 kW projects. Also in the Netherlands first projects are being developed. Through this, innogy laid the foundation for investments in utility-scale solar projects. However, final investment decisions for these solar development projects still have to be taken.