OTPP's Mega JV With Corio to Develop Offshore Wind Projects Worldwide
The Ontario Teachers’ Pension Plan Board will invest up to US$1 billion over the next six to eight years in an international offshore wind development in partnership with Corio Generation, a company within Macquarie Asset Management’s Green Investment Group.The joint venture will fund the development of 14 fixed-bottom and floating projects in South Korea, Taiwan, Japan, Ireland and the United Kingdom, all of which are currently in development by Corio with an initial target of up to nine gigawatts. The $241.6-billion Canadian pension will acquire up to half its partner’s stake in the projects, and support development, construction and operation.
“We’ve been looking at offshore wind for a number of years, and we’ve looked at it in a number of different ways,” said Chris Ireland, managing director of Greenfield Investments and Renewables, part of the infrastructure team at Teachers.
“We’ve, frankly, never been successful (until now),” he added. “The competition has been quite high. There’s just not that many projects. And there’s not that many big players in market.”
The transaction is expected to close in the third quarter, subject to regulatory approval.
Ireland, an engineer with a Master’s degree in fluid mechanics who has been at Teachers for 16 years, acknowledged that the technology is relatively new and risks are inherent in developing, constructing and operating platforms with 100-metre-high towers that will be fixed or anchored 10 to 50 kilometres offshore.
“There are risks with development, but we think the returns (will) offset that risk,” he said, adding that the Teachers’ first offshore wind projects will diversify the pension’s energy holdings and help meet carbon-reducing environmental targets.
“This is a big part of the future of power generation in our opinion.”
According to the Canadian pension, total capacity of offshore wind farms is expected to reach 228 gigawatts by 2030, a target that will require collaboration between businesses and governments around the world and investments totalling $500 billion.
Ireland, who worked at Macquarie in New York before joining Teachers’ in 2006, said the deal with Corio was complex and months in the making, and was helped along by the fact that the Canadian pension fund has done past deals with Macquarie.
“Macquarie recognizes us as a sophisticated investor that can deal with complicated (transactions),” he said.
“They also recognize that we have responsible investing goals, and that we have experience in funding development projects.”
Teachers’ $26.1-billion infrastructure platform has made a number of recent investments to capitalize on the energy transition, such as Cubico Sustainable Developments, which has onshore renewable energy projects in a number of countries in South America, Europe and the United Kingdom, as well as Mexico, the United States and Australia.
Other infrastructure portfolio investments include Anbaric Development, which specializes in the design, development, financing, and construction of large-scale electric transmission systems, a 50 per cent interest in NextEra Energy, which has a portfolio of wind, solar and energy storage assets across the United States and Equis Development, which has infrastructure development and investments across the Asia-Pacific region, with a primary focus on Australia, Japan, and South Korea.
Jonathan Cole, chief executive of Corio Generation, said the new partnership with Teachers is a “highly significant” milestone that combines the pension plan’s investment expertise with a large-scale global portfolio and a team of industrial experts.
“With this collaboration with Ontario Teachers’, Corio will generate vast amounts of clean, affordable electricity and support thousands of green jobs, while providing attractive returns on investment,” he said.
Ireland said he hopes the latest investment in offshore wind platforms will capture the attention of other developers the pension fund hasn’t worked with and create “more opportunities in energy transition type investments” such as battery storage, sustainable hydrogen production and electric vehicles.
Construction on the first offshore wind project is expected to start in the next couple of years, and be up and running within about five years, Ireland said, noting that the investments will fit with both Teachers’ environmental commitments and its long-term investment horizon.The Canadian pension fund has committed to achieving net-zero greenhouse gas emissions across its portfolio by 2050, with an interim target to reduce portfolio carbon emissions intensity by 45 per cent from its 2019 baseline by 2025, and 67 per cent by 2030.
The latest deal won praise from Shift Action for Pension Wealth and Planet Health, a group that is often critical of so-called greenwashing when financial institutions or money managers seek to look like they are doing more for the environment than they really are.
“This is a smart investment,” Shift said of Teachers’ deal with Corio. “It allows the fund to profit from exceptional growth in the renewable energy industry while simultaneously protecting our shared climate. We hope other pension plans will follow this example.”
Craig Richard of Windpower Monthly also reports that Corio Generation takes on Canadian pension fund for 9GW offshore wind JV:
Newly launched offshore wind developer Corio Generation has agreed to form a joint venture (JV) with a Canadian investor to support the development of up to 9GW of capacity worldwide.
Corio – a new standalone offshore wind developer created by Macquarie’s Green Investment Group – is due to partner with infrastructure investor Ontario Teachers’ Pension Plan.I
Their project pipeline consists of 14 fixed-bottom and floating offshore wind projects in South Korea, Taiwan, Japan, Ireland and the UK. The 9GW included in the JV with Ontario Teachers' forms the majority of Corio's planned 15GW of offshore wind development.
Ontario Teachers’ has agreed to invest up to US$1 billion in development capital to acquire up to half of Corio’s stake in each of the 14 projects.
Corio explained that the investment from Ontario Teachers’ – which has C$26.1 billion (US$20 billion) invested in infrastructure assets worldwide, including renewable energy projects – will give the developer “deeper access to long-term institutional capital”.
The transaction is expected to close in the third quarter of 2022 subject to customary closing conditions and regulatory approvals.
Razak Musah Baba of IPE Real Assets also reports that Ontario Teachers' and Corio have teamed up to develop offshore wind projects:
A new offshore wind business launched by Macquarie’s Green Investment Group has teamed up with Ontario Teachers’ Pension Plan Board to develop offshore wind projects.
Corio Generation has partnered with the C$242bn (€180.4bn) Ontario Teachers’ pension fund to finance the development of an initial portfolio of up to 9GW in wind projects.
Ontario Teachers’ will invest up to US$1bn (€950.2m) in development capital, the companies said in a joint statement.
The partnership’s portfolio will consist of 14 fixed bottom and floating projects in South Korea, Taiwan, Japan, Ireland and the UK, all of which are currently under development by UK-headquartered Corio.
As part of the partnership, Ontario Teachers’ will acquire up to half of Corio’s stake in these projects, supporting development, construction and operation.
The companies said they will also explore opportunities to expand the partnership through the creation or acquisition of new projects.
Jonathan Cole, the CEO of Corio Generation, said: “This partnership with Ontario Teachers’ represents a highly significant milestone on our journey and demonstrates Corio’s capability to bring together a large-scale global portfolio, a team of industrial experts and world-class investment partners. With this collaboration with Ontario Teachers’, Corio will generate vast amounts of clean, affordable electricity and support thousands of green jobs, while providing attractive returns on investment.”
Chris Ireland, greenfield investments and renewables, infrastructure and natural resources managing director at Ontario Teachers’ said: “Offshore wind is poised for significant growth in the years ahead as countries work towards ambitious decarbonization goals. This has been a strategic focus sector for Ontario Teachers’ for several years and is a natural fit in our portfolio as we work towards our net-zero targets.”
OTPP put out a press release on this mega deal with Corio Generation:
- Corio Generation partners with Ontario Teachers’ Pension Plan to support the development of up to 9GW of offshore wind worldwide
- Ontario Teachers’, one of the world’s largest institutional investors, will invest up to US$1 billion in development capital
- This collaboration enhances Corio’s long-term partnership approach by providing deeper access to long-term institutional capital
Newly launched Corio Generation (Corio) has entered into a joint venture with leading global investor Ontario Teachers’ Pension Plan Board (Ontario Teachers’) to fund the development of an initial portfolio of up to 9 GW offshore wind projects.
The portfolio will consist of 14 fixed bottom and floating projects in South Korea, Taiwan, Japan, Ireland and the UK, all of which are currently under development by Corio. Ontario Teachers’ will acquire up to half of Corio’s stake in these projects, supporting development, construction and operation. Corio and Ontario Teachers’ will also explore opportunities to expand the partnership through the creation or acquisition of new projects. In total, the partnership announced today represents an investment of up to US$1 billion in development capital from Ontario Teachers’.
Ontario Teachers’ is a major infrastructure investor with C$26.1 billion in infrastructure assets across five continents, including a sizeable portfolio of renewable assets. As a long-term, responsible investor, it is an ideal partner to invest alongside Corio.
Corio Generation, a Green Investment Group portfolio company, is a specialist offshore wind business and home to one of the world’s largest offshore wind development portfolios. By combining a unique blend of sector-leading expertise with deep access to institutional capital, Corio applies a long-term partnership approach to the creation and management of projects.
Subject to the satisfaction of customary closing conditions and regulatory approvals, the transaction between Corio and Ontario Teachers’ is expected to reach completion in Q3 2022.
Jonathan Cole, CEO of Corio Generation, said: “Corio Generation is committed to accelerating the global deployment of renewable energy by delivering its global portfolio of offshore wind projects. This partnership with Ontario Teachers’ represents a highly significant milestone on our journey and demonstrates Corio’s capability to bring together a large-scale global portfolio, a team of industrial experts and world-class investment partners. With this collaboration with Ontario Teachers’, Corio will generate vast amounts of clean, affordable electricity and support thousands of green jobs, while providing attractive returns on investment.”
Chris Ireland, Managing Director, Greenfield Investments and Renewables, Infrastructure and Natural Resources at Ontario Teachers’ said: “We are pleased to partner alongside Corio and support the development of a high-quality, global portfolio of offshore wind projects. Offshore wind is poised for significant growth in the years ahead as countries work towards ambitious decarbonization goals. This has been a strategic focus sector for Ontario Teachers’ for several years and is a natural fit in our portfolio as we work towards our net-zero targets.”
Corio has been established at a time when the demand for green electricity continues to rise – with the total capacity of offshore wind farms expected to reach 228 GW in 2030. This requires greater collaborative action from businesses and governments around the world as well as around US$500 billion of investment in offshore wind by 2030.
Ontario Teachers’ has committed to achieving net-zero greenhouse gas emissions across its portfolio by 2050. It has also set ambitious interim reduction targets to reduce portfolio carbon emissions intensity by 45% by 2025 and 67% by 2030, compared to a 2019 baseline.
About Corio Generation
Corio Generation is a specialist offshore wind business, dedicated to harnessing offshore wind energy worldwide. With a unique blend of sector-leading expertise and deep access to long-term capital, we apply a long-term partnership approach to the creation and management of projects, taking them from origination, through development and construction, and into operations.
Our 15 GW development portfolio is one of the largest in the world, spanning established and emerging markets, as well as floating and traditional fixed-bottom technologies. These next generation offshore wind projects will help form the backbone of the net-zero global energy system while meeting the energy needs of communities and corporate offtakers sustainably, reliably, safely and responsibly.
Corio Generation is a Green Investment Group (GIG) portfolio company, operating on a standalone basis. GIG is a specialist green investor within Macquarie Asset Management, part of Macquarie Group. For more information visit coriogeneration.com and follow us on Twitter @CorioGeneration
About Ontario Teachers’
Ontario Teachers' Pension Plan Board (Ontario Teachers') is a global investor with net assets of C$241.6 billion as at December 31, 2021. We invest in more than 50 countries in everything from equities to real estate to infrastructure and venture growth, to deliver retirement income for 333,000 current and retired teachers in Ontario.
With offices in Hong Kong, London, San Francisco, Singapore and Toronto, our more than 350 investment professionals bring deep expertise in industries ranging from agriculture to artificial intelligence. We are a fully funded defined benefit pension plan and have earned an annual total-fund net return of 9.7% since the plan’s founding in 1990. At Ontario Teachers’, we don’t just invest to make a return, we invest to shape a better future for the teachers we serve, the businesses we back, and the world we live in. For more information, visit otpp.com and follow us on Twitter @OtppInfo.
This is a huge deal for Ontario Teachers' Pension Plan, one that will place it at the forefront of institutional investors investing in offshore wind projects.
Kudos to Chris Ireland, managing director of Greenfield Investments and Renewables, and his team for bringing this deal together.
From the first article above:
Ireland, an engineer with a Master’s degree in fluid mechanics who has been at Teachers for 16 years, acknowledged that the technology is relatively new and risks are inherent in developing, constructing and operating platforms with 100-metre-high towers that will be fixed or anchored 10 to 50 kilometres offshore.
“There are risks with development, but we think the returns (will) offset that risk,” he said, adding that the Teachers’ first offshore wind projects will diversify the pension’s energy holdings and help meet carbon-reducing environmental targets.
“This is a big part of the future of power generation in our opinion.”
There are risks with development but there are also higher returns and they’re thinking offshore wind will be a big part of the future of power generation.
OTPP has agreed to invest up to US$1 billion in development capital to acquire up to half of Corio Generation’s stake in each of the 14 fixed bottom and floating projects in South Korea, Taiwan, Japan, Ireland and the UK, all of which are currently under development by UK-headquartered Corio.
Moreover, the companies said they will also explore opportunities to expand the partnership through the creation or acquisition of new projects.
OTPP couldn't have picked a better partner for this sizable investment.
Corio Generation is a new standalone offshore wind developer created by Macquarie’s Green Investment Group (GIG) back in March:
Macquarie’s Green Investment Group (GIG) has sold its entire stake in Formosa I International Investment as it also announced plans to launch a standalone specialist offshore wind business, Corio Generation (Corio).
GIG has sold its 25% stake in its Formosa I International Investment, which operates the Formosa 1 offshore wind farm off Taiwan's Miaoli County, comprising the 8MW Formosa 1 (pilot phase) and 120MW Formosa 1 Phase 2 . The sale is to a Japanese consortium comprising Japan's Mitsui OSK Lines (MOL), Toho Gas, and Hokuriki Electric Power Company. MOL said the three companies are in the process of setting up a special purpose company in Taiwan.
"The transaction is expected to complete after all the necessary procedures including approvals from the Taiwanese authorities," MOL said. This will be the first investment for them outside Japan's offshore wind sector, it added.
Corio offshore plan
Meanwhile, GIG announced further details of its standalone offshore business.
Led by wind industry stalwarts Jonathan Cole as CEO and Samuel Leupold as chairman, Corio will be headquartered in the UK, with offices in London and Edinburgh. Its operations – taking over from GIG directly to progress its project pipeline of over 15 GW – are due to start in April 2022. Leupold will simultaneously maintain his position as GIG's chairman of offshore wind energy.
Some 100 staff will be transferred from GIG into the new business, with a further recruitment drive planned for the coming year. The existing portfolio they will oversee includes previously announced projects in the UK, Europe, Taiwan, Korea, and Australia. As well as moving these forward, Corio will seek new business opportunities in the market too, notably in the Americas, it said. Corio will "take projects from origination, through development and construction, and into operations", which will be "underpinned by access to long-term capital sourced both within Macquarie and from third parties", GIG said.
‘Unique opportunity'
Cole was previously head of offshore wind at Iberdrola. "I am hugely excited by this unique opportunity to lead a business that combines some of the world’s best financial and industrial expertise," he said. "I believe that Corio will play a significant role in accelerating the deployment of offshore wind around the world. From day one, we will be able to work with partners, suppliers and investors to deliver a major project pipeline that will not only provide vast quantities of clean affordable electricity but will also support thousands of green jobs.”
Now, you understand why OTPP is forking over US $1 billion to develop and operate up to 9GW ofoffshore wind projects.
Corio has deep industrial expertise and is led by industry stalwarts, Jonathan Cole, its CEO and Samuel Leupold, its chairman.
It now has a world-class investment manager as a partner to develop these offshore wind projects and I see this deal as just the beginning of a long and fruitful partnership.
Together, OTPP and Corio will not only provide vast quantities of clean affordable electricity but these projects will also support thousands of green jobs.
OTPP has committed to achieving net-zero greenhouse gas emissions across its portfolio by 2050. It has also set ambitious interim reduction targets to reduce portfolio carbon emissions intensity by 45% by 2025 and 67% by 2030, compared to a 2019 baseline.
This is exactly the type of mega deal that checks off al the right boxes:
- Partnering up with an industry leader to develop offshore wind projects which are in huge demand all over the world
- Collecting nice cash flows from these greenfield development projects once they're built for a very long time, better matching their long-dated liabilities
- Having an inflation-adjusted premium built into the clauses of the contracts which are highly regulated
- Investing in sustainable energy to achieve net-zero greenhouse gas emissions across its portfolio by 2050 and to reduce portfolio carbon emissions intensity by 45% by 2025 and 67% by 2030, compared to a 2019 baseline.
But what I really like about this deal is it demonstrates how strong OTPP's global brand truly is and what a strong long-term partner it is.
Corio was probably approached by many institutional investors to develop these offshore wind projects but it chose OTPP for a reason and that just speaks volumes.
OTPP won't just bring deep pockets, it's also bringing its financial and infrastructure expertise, immense network and vast portfolio of companies and specialized platforms.
I'll wrap it up there but this is an exciting and huge deal for Corio, OTPP and its members, one that is part of the ongoing energy transition taking place throughout the world.
Below, an older (2017) clip where Jonathan Cole, then Offshore Managing Director at ScottishPower Renewables, now CEO of Corio, talked to World Energy TV about ScottishPowers expanding portfolio of offshore wind.
Second, in order to promote the introduction of offshore wind power in Japan, it is necessary to develop technology for floating offshore wind power systems as well as fixed-bottom offshore wind power systems.
NEDO develops low-cost floating offshore wind power systems which are suitable for the meteorological and oceanic conditions of Japan’s coastal areas. They can be installed in offshore areas where the water depth is about 50 meters, relatively shallow for floating-type systems. Watch the demonstration project of next-generation floating offshore wind turbines (2018).
Also, a wind farm off the coast of Yorkshire, set to become the world's largest, has generated electricity for the first time. The turbines are being constructed 75 miles out to sea and will be able to power the equivalent of a million homes once it has been fully built.
Lastly, conducted by offshore wind expert Walt Musial, this webinar provides a high-level overview of existing floating offshore wind technology and the prospects of a United States offshore wind market.
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