Energy group E.ON and Danish pension fund PensionDanmark agree on wind farm deal

Today the German energy group E.ON has sold 50 per cent of three US wind farms farms – two in Texas and one in Pennsylvania – to the Danish pension fund PensionDanmark. This is the first transaction of its kind between the two companies.

“This transaction is an important step to implementing our strategy to generate more value with the use of less capital. With this strategic move we win the possibility to realize more of our excellent renewables pipeline and thus contribute to the transformation of the energy system. The agreement demonstrates that our infrastructure assets are very attractive for investors like PensionDanmark. Further transactions are likely to follow,” says Marcus Schenck, CFO of E.ON.

E.ON retains a material ownership share and will be responsible for the day-to-day operation of the wind farms, which supply 120,000 US households with electrical power. The power generated by these wind farms over the next 15 years has been sold to a number of US utilities companies at a fixed price.

CEO Torben Möger Pedersen, PensionDanmark, is pleased to have closed this deal with the energy group. “This is our first direct investment in US wind farms, and also our first transaction with E.ON. Our investment in wind farms in Denmark, and also in the USA, will provide a stable and attractive return at a level very similar to what you can expect from equities, but with a significant less risk and expose to the business cycle, so we will continue to focus strongly on investment of this type,” says Torben Möger Pedersen.

In response to the very low bond yields and uncertain economic outlook, PensionDanmark is seeking to increase its investments in stable alternatives, such as various types of infrastructure, to around 10 per cent of its assets. The aim is to invest a further USD 2 billion in infrastructure over the next five years.

Facts about the wind farms and the transaction

The transaction comprises three US wind farms:

  • Papalote Creek I (Texas), 180 MW, 109 Vestas wind turbines, Oct. 2009.
  • Papalote Creek II (Texas), 200 MW, 87 Siemens wind turbines, Dec. 2010.
  • Stony Creek (Pennsylvania), 53 MW, 35 General Electric wind turbines, Nov. 2009.

PensionDanmark will acquire a 50 per cent ownership share in the wind farms. E.ON will be responsible for the day-to-day operation of the wind farms. 90 per cent of the power generated will be sold under fixed-price Power Purchase Agreements running for another 15 years. The wind farms supply around 120,000 households with power.

The final transaction is subject to regulatory approval and certain financing arrangement.