Germany

Germany

PNE Wind primed for further success

Strong relationship with Dong paying dividends

PNE is 'the only listed developer' in Germany to benefit strongly from the emerging offshore market
PNE is 'the only listed developer' in Germany to benefit strongly from the emerging offshore market

Germany-based offshore and onshore wind developer PNE Wind is given a largely positive business assessment by independent equity research company 7C Consult. PNE’s close association with Danish majority state-owned Dong Energy is identified as one of its core strengths.

PNE Wind is "the only listed wind developer in Germany that has substantially benefited from the strongly emerging offshore business, having sold six offshore projects while retaining the service contract for the projects", 7C Consult says in a recent analysis.

PNE’s service provider contracts for the sold projects are expected to reap in up to €8.5m in 2012-15, the analysis continues. Aiming to build on this success, it is "currently eyeing offshore projects outside Germany", the analysts add.

It appears that PNE Wind has acted as good proxy for Dong Energy, "as its investment case depends to a large extent on Dong's decisions in the roll-out of its offshore strategy plan", the analysis concludes.

Healthy portfolio

PNE Wind's offshore portfolio now encompasses nine projects (three still owned by PNE Wind) with more than 3.5GW and expected to expand to 5GW in the medium term, says 7C Consult.

The analysts pick out two key events earlier this year that "will clearly build momentum in the offshore market": implementation of Germany's offshore wind liability law and Mitsubishi's partnership with Tennet in four German North Sea offshore transmission cable projects.

For PNE Wind, this should increase the likelihood that the Gode Wind projects sold to Dong will be implemented and future milestones reached in line with expectations, reckons 7C Consult.

On the value of the projects, it points out that Dong sold a 50% stake in Borkum Riffgrund 1 for about $6.1m/MW in February 2012, earning a premium of $4.7m/MW according to market estimates. "This is considered to be the most expensive deal for an offshore wind project," it adds.

Gode Wind 1 and 2 are expected to be connected to shore via DolWin 2, which should be ready in 2015. PNE Wind expects milestone payments when Dong makes final investment decisions on Gode Wind 1 and 2 – probably in 2013-14, says 7C Consult. Gode Wind 3 does not yet have a construction permit.

Rising profitability

With operational result (Ebit) of €20.4m in 2012 after just €70,000 the previous year, PNE Wind's profitability is  expected to improve further as the company receives the milestones payments "in the absence of any associated expenses for the projects already sold", says 7C Consult.

Dong Energy will build the 320MW Borkum Riffgrund 1 over the period 2013-15. Borkum Riffgrund 2 is on hold due to the lack of a firm grid-connection date from Tennet, but could be connected via the DolWin3 cable.

The 560MW Nautilus 2 project was sold to SSP Technology Holding in late 2011. PNE Wind remains service provider until a construction permit is issued, possibly in 2013, again triggering milestone payments. As Nautilus 2 is slated for a site close to the Gode Wind projects, PNE Wind may receive a significant sum from the sale based on the pricing of the Gode Wind projects. These made €157m compared with investment of only around €50m, says 7C Consult.

The Nemo, Jules Verne and Nautilus 1 projects, each with a slated capacity of 480MW, are still at the early stages of permitting.

Offshore wind projects developed by PNE Wind

Project                             Capacity (MW)                 Owner

Gode Wind 1                     332                                   DONG Energy

Gode Wind 2                     516                                   DONG Energy

Gode Wind 3                     105                                   DONG Energy

Nemo                               480                                   PNE Wind

Jules Verne                       480                                   PNE Wind

Nautilus 1                         480                                   PNE Wind

Nautilus 2                         560                                   SSP Technology Holdings

Borkum Riffgrund 1            277                                  DONG (50%), Kirkbi & Oticon (50%)

Borkum Riffgrund 2            349                                  DONG Energy

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