PIC debuts offshore wind investment with Walney debt financing

Pension Insurance Corporation (PIC) has made its first wind farm investment by providing debt financing to help fund the acquisition of a 50% stake in an offshore wind farm, jointly owned by Ørsted and Danish pension funds PKA and PFA.

The specialist insurer of defined benefit pension funds said it has invested £115m (€129m) to provide the debt financing for the Walney Extension Offshore Wind Farm project in the UK. 

Earlier this month, green energy company, Ørsted signed an agreement to sell 50% of Walney Extension, a 659 megawatt UK offshore wind farm project to a consortium.

PKA and PFA will each obtain a 25% ownership interest in the project. Walney Extension, which is currently under construction, will be the world’s largest offshore wind farm when commissioned in the second half of 2018.

Alongside large institutional investors, PIC said it took part in a £1.3bn senior secured project debt issuance due to mature in 2033. One of the tranches of the bond is additionally guaranteed by EKF, Denmark’s Export Credit Agency.

The investment provides a good match for PIC’s pension liabilities with predictable CPI-linked, secured and amortising cash flows, it said.

The revenues are backed by the Government’s Contract for Difference (CfD) regime, which provides fixed, CPI-linked prices over the maturity of the debt.

Florence Carasse, debt origination manager at PIC, said: “We are very pleased to have completed our first investment in the offshore wind industry with one of the most experienced and respected names in the industry.

“The Walney Extension Project will provide clean energy to a large number of UK homes while backing our pension payments for many years.”

PIC said it has previously invested in renewable energy including solar generation and biomass, and is now building on its experience with the offshore wind transaction.

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