Blackstone backs wind with more than EUR1bn

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While the details of the deal are tantalisingly vague, The Blackstone Group has made headlines with a bold move. The buyout house has agreed to invest EUR1bn in Meerwind, a joint venture windpark planned and designed by German company Windland Energieerzeugungs GmbH, based in Berlin. This marks the first investment of a private equity firm of that size in Germany's offshore windfarms.

Meerwind is a two-part offshore windfarm located in the North Sea, just off Helgoland. The projected capacity of 400MW is to be generated by 80 turbines on an area of 40 square kilometres. Upon completion in 2012, it will generate 1.5bn KWh of electricity, which meets the energy need of half a million households and can save as much as 1.2 million tonnes of CO2 every year.

The equity for the investment is drawn from Blackstone Capital Partners V. The German government has set the goal to build windfarms with 25,000 MW capacity by 2030 in the North and East Sea to meet about 15% of Germany's energy demand. However, as offshore windfarms are much more expensive than land-based windfarms, energy firms and investors have been reluctant to invest in offshore. To offset this, the German government passed the Renewable Energies Act (Erneuerbare-Energien-Gesetz, EEG) in June. This raises prices for wind energy and allows offshore windfarms to generate returns of around 10%, making investments more competitive and profitable (see page 39).