Northland Power and Highland Group Holdings, through a unit, have signed a definitive agreement whereby Northland will buy 100 percent of Deutsche Bucht, a 252 MW offshore wind project currently in advanced development.
Deutsche Bucht is Northland’s third offshore wind project. It is located 60 miles northwest of the island of Borkum in the German Exclusive Economic Zone, 47 miles from Northland’s other German offshore wind project, Nordsee One.
The total estimated project cost is about $1.27 billion, and once operational, it is expected to generate over 1,000 gigawatt hours of electricity per year.
Northland expects to invest about $400 million of corporate funds with the balance of the project cost provided by project financing and pre-completion revenues. Financial closing is expected mid-2017. Northland expects this investment will be sourced from cash on hand, corporate liquidity, and preferred shares.
The project is expected to be accretive on a free cash flow per share basis upon its completion, and provide project returns commensurate with Northland’s investment criteria.
The majority of the project returns are expected to be earned during the 13-year feed-in-tariff period, with the remainder of the expected returns earned in the later years from the German wholesale electricity market.
DeBu is currently in an advanced stage of development — it is expected to begin construction shortly after financial close, with project completion expected by the end of 2019. Like Gemini, DeBu will use a two-contract construction strategy. MHI Vestas Offshore Wind has been selected as the preferred supplier to supply and install the turbines.
An affiliate of Van Oord nv, the balance of plant contractor for Gemini and the other preferred supplier, will provide the turbine installation vessel and supply and install the wind turbine foundations and the offshore electrical infrastructure. MVOW will also maintain the turbines under a long-term service contract. DeBu will be connected to the 800 MW BorWin Beta off-shore converter station which has already been constructed.
Closing of the acquisition is subject to clearing certain conditions precedent, which the parties will work to complete over the next several months.