PIC invests over £100 million in offshore wind farm

London, 14 November 2017 – Pension Insurance Corporation plc (“PIC”), a specialist insurer of defined benefit pension funds, has invested c.£115 million to provide debt-financing for the acquisition of a 50 per cent share in the Walney Extension Offshore Wind Farm Project, jointly owned by green energy company, Orsted (formerly Dong Energy) and Danish pension funds, PKA and PFA. Alongside large institutional investors, PIC took part of a £1.3 billion 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.

Situated off the coast of Cumbria, the offshore wind farm will have a total capacity of 659MW and power more than 500,000 UK homes. PIC has previously invested in renewable energy including solar generation and biomass, and is now building on its experience with this inaugural offshore wind transaction.

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

Key points:

• £115 million in total size
• Orsted are market leaders in wind power and provide significant financial backing for the transaction
• The debt is CPI-linked, secured, amortising and matures in 2033 matching pensioner cash-flows
• CfD contracts provide predictable, secure and CPI-linked prices
• Once built, the Walney Extension will be the world’s largest offshore wind farm
  • 659MW capacity - enough to power more than 500,000 UK homes
  • 87 turbines: 40 MHI Vestas V164-8.0MW and 47 Siemens Gamesa SWT-7.0MW-154 turbines
  • Construction is already ongoing and expected to be completed in the second half of 2018
• It is estimated that over the next decade, the UK will need around £100 billion of capital investment in its electricity infrastructure1

Florence Carasse, Debt Origination Manager at Pension Insurance Corporation 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.”

It is estimated that over the next decade, the UK will need around £100 billion of capital investment in its electricity infrastructure to accommodate projected future increases in demand and to replace ageing power stations.Offshore wind is a growing industry in the UK, which has the largest amount of installed offshore wind capacity in Europe representing 41% of all installations, followed by Germany and Denmark2.  

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1 - https://www.ofgem.gov.uk/electricity/wholesale-market/market-efficiency-review-and-reform/electricity-market-reform-emr

2 - https://windeurope.org/wp-content/uploads/files/about-wind/statistics/WindEurope-Annual-Offshore-Statistics-2016.pdfp. 18

Notes to Editors:

For further information please contact:

Pension Insurance Corporation

Jeremy Apfel
+44 20 7105 2140
apfel@pensioncorporation.com

Teneo Blue Rubicon

Anthony Silverman
+44 (0)20 7260 2700
anthony.silverman@teneobluerubicon.com

About Pension Insurance Corporation
Pension Insurance Corporation plc (“PIC”) is a leading provider of buy-ins and buyouts to the trustees and sponsors of UK defined benefit pension schemes. At half year 2017, PIC had insured 145,400 pension fund members and had £24.2 billion in financial investments, accumulated through the provision of tailored pension insurance buyouts and buy-ins to the trustees and sponsors of UK defined benefit pension schemes. Clients include FTSE 100 companies, multinationals and the public sector. PIC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority (FRN 454345). For further information please visit www.pensioncorporation.com

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