Leading players in the UK’s energy, pensions, and infrastructure sectors have today teamed up to form a new joint venture to ramp up investment in the country’s booming offshore wind industry.
Octopus Energy Group’s generation business announced it has formed a new joint venture with pensions giant Nest and GLIL Infrastructure, which has acquired a 12.5 per cent stake from Global Infrastructure Partners in the 1.2GW Hornsea One wind farm is off the Yorkshire coast.
The deal sees Octopus Energy Generation’s fund management team invest £200m in Hornsea One on behalf of Nest, with GLIL Infrastructure investing the same sum to take the total investment from the new venture to £400m.
The deal further highlights the growing attractiveness of offshore wind projects to pension funds. Nest manages the UK’s automatically workplace enrolled pensions, while GLIL Infrastructure is a £3.6bn fund that specialises in investing in infrastructure on behalf of pension funds.
Operated by Ørsted, the 1.2GW Hornsea One wind farm is currently the world’s largest offshore wind farm, boasting 174 wind turbines that can generate enough power for over one million homes.
The deal is also the latest step in Octopus’ offshore wind investment push, which has seen it recently take stakes in the Lincs Offshore Wind Farm in England on behalf of Octopus Renewables Infrastructure Trust (ORIT), the Borssele V Offshore Wind Farm in the Netherlands , and floating offshore wind developer Simply Blue.
“The UK is already a world leader in offshore wind but there is still so much more we can do,” said Zoisa North-Bond, CEO of Octopus Energy Generation. “Harnessing the UK’s strong wind resources out at sea will help provide energy security and bring down energy bills. We’ve already made a splash in offshore wind after only entering this renewable technology earlier this year, and we have lots more coming up.”
Alex Brierley, co-head of Octopus Energy Generation’s fund management team, said the new venture also underscored the “growing demand we’re seeing from institutional investors to invest in renewable energy”.
“It’s brilliant to be expanding our relationship with Nest and starting a new one with GLIL to help pension savers’ money make a truly positive impact on people and the planet,” he said. “The more we collectively invest in renewable energy, the faster we can shift to a greener, cleaner future.”
Stephen O’Neill, Nest’s head of private markets, said renewables projects were particularly attractive to pension funds. “Renewable energy sources have huge potential for long-term investors like Nest,” he said. “Its desirability should only increase in the coming years and as the UK accelerates towards net zero, we’re confident Hornsea One will deliver inflation beating returns and grow the money our members have invested.”
The news comes just days after Octopus Energy announced a separate partnership with turbine manufacturer EWT to repower up to 1,000 existing onshore wind turbines in the UK.
Octopus and EWT said they have identified turbines located across England, Scotland and Wales that have already been powering communities for years that would benefit from being replaced or upgraded to boost their capacity.
By increasing the green generation capacity of around a tenth of the UK’s fleet of onshore turbines, there is potential to power hundreds of thousands more homes with new cheap, green energy, and drive down energy bills for more people, the company said.