Vestas, the world’s largest maker of wind turbines, has taken a 25 percent stake in the renewable asset manager Copenhagen Infrastructure Partners (CIP).
The €500 million ($612 million) deal will include an upfront payment of €180 million, followed by €320 million as a performance-based earn-out.
CIP runs seven funds, with a total of €14 billion under management. That portfolio represents 20 major, large-scale projects with 8 gigawatts of capacity. Another 20 greenfield projects will close finance in the next three years, according to CIP.
Vestas said the deal would enable it to “further expand its presence in renewable project development” including across other renewable technologies.
CIP has stakes in onshore and offshore wind projects as well as solar, energy storage, transmission and waste-to-energy projects. It has a 35 percent stake in the Beatrice offshore wind farm in the U.K. The 588 MW operational project was awarded a contract for difference, guaranteeing it revenue of £162.33 ($219.25) per megawatt-hour. CIP also has a 50 percent stake in Vineyard Wind in the U.S.
Vestas and CIP said there will not be any preferential treatment in the procurement of turbines for its wind projects.
Vestas purchased just over 25 percent of the wind and solar developer Sowitec in April 2019, as efforts to diversify revenue began.
Pressure on the profitability of turbine sales has seen the major manufacturers build up their service contracts in an effort to find additional revenue. In 2019, earnings before interest and taxes (EBIT) for Vestas power solutions business was 7.2 percent. The EBIT from its services business was 25.8 percent.
Development and co-development offer another route to profits that is insulated from any undulations in turbine orders.
New power-to-X fund planned for 2021
CIP said part of the proceeds will be used to create a new Energy Transition Fund, which will focus on decarbonization technologies such as power-to-X, or the conversion of electricity to fuels such as hydrogen and methane or other chemical feedstocks. The fund will launch in the first half of 2021.
“In order to reach the critical point of net-zero emissions, the growth within electrification needs to be complemented by decarbonization of fuels to transportation, feedstock to industrial sectors, and production of green ammonia as fertilizer for agriculture,” Christina Grumstrup Sørensen, the CIP senior partner over asset management activities, said in a statement. “Vestas and CIP share this strategic perspective alongside a joint ambition to continue to develop CIP into the leading platform for institutional investors seeking to deploy capital directly into some of the largest and leading-edge energy projects across the world.”
Vestas recently established a venture arm to provide early-stage funding to companies across the broader energy transition including power-to-X and long-duration energy storage.
CPI is also part of a 50-50 joint venture with Mitsubishi Heavy Industries to develop offshore wind projects in Japan. MHI recently swapped its stake in offshore turbine maker MHI Vestas for a 3 percent stake in Vestas, which has brought offshore turbine manufacturing fully in-house.