ESB in talks to invest in offshore wind in Scotland

Negotiations with Canadian energy group at ‘advanced’ stage

The energy projects are expected to generate almost 2.4GW of electricity. Photo: Getty Images

John Mulligan

The ESB is in advanced talks to invest in two multi-billion euro offshore wind projects off the coast of Scotland. The energy projects – expected to generate almost 2.4GW of electricity – are being developed by Canada’s Northland Power.

The move would intensify the ESB’s investment footprint in the region. It already has a stake in the Neart na Gaoithe offshore windfarm off Scotland’s coast.

The planned investment by the ESB in the new wind farms was first reported by industry publication PeakLoad.

The two offshore projects being developed by energy giant Northland are off the Isle of Lewis in the Outer Hebrides. The projects, with a total planned maximum output of 2.34GW, are due to come on stream between the end of this decade and early in the next. They include a 1.5GW floating turbine project and an 840MW seabed-mounted wind farm.

Northland has a global investment strategy, with assets across Europe, North America, Latin America and Asia. It operates across energy platforms, with interests in onshore and offshore wind, solar and battery storage.

It has 10GW of early stage projects, while 3GW of assets are expected to become operational between this year and 2027. Those 3GW of projects will cost between C$16bn and C$19bn to develop (€11bn to €13bn ).

Northland told investors earlier this month that it operates a sell-down partnership strategy.

“This partnership model is a flexible and proven funding source and will form part of our long-term funding plans to help position the company for long-term growth,” it noted during the presentation.

It said it seeks partners with a strong investment grade credit rating.

PeakLoad reported that the ESB – which declined to comment on Thursday –  is being advised by law firm Linklaters in its talks with Northland.

The ESB owns a 50pc stake in the massive Neart Na Gaoithe offshore wind  farm project in Scotland. The other half is owned by France’s EDF Renewables.

The wind  farm will generate up to 450MW of electricity when completed. Onshore work started in 2019 and the first turbine foundation offshore was installed last October.

The wind  farm was originally expected to be commercially operational by last month, with that target now extended to next year. The project has been a huge technical and financial challenge.  It was significantly affected by challenging seabed conditions and supply-chain constraints as a result of the Covid pandemic.

In 2021, the ESB shouldered a €106m impairment on its stake in the project because it anticipated “significant additional construction costs”.

Accounts for an ESB holding company in the UK show that it made an additional £110m (€127m) equity investment in the company behind the Scottish project last year, and provided a shareholder loan of £96m .

The ESB is currently developing 5GW of wind energy projects off the coast of Ireland. This week, it signed a memorandum of understanding with the Port of Cork to support the development of Ireland’s offshore wind and green hydrogen sector.

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