Blackstone to invest €1bn in wind farm

By James Wilson in Frankfurt and Fiona Harvey in London
Published: July 9 2008 19:45

Blackstone, the buy-out group, is to invest €1bn ($1.6bn) in developing a wind farm off the German coast in a sign that investors are ready to commit substantial sums to alternative energy projects while oil prices seem set to remain high.
Blackstone will form a partnership with private investors who own development rights for the project, which was approved last year and is expected to be built in the North Sea over the next two years.
The investment will be Blackstone’s first in alternative energy. It is unusual for a private equity firm to commit such a sum to start a wind energy project, particularly offshore where projects are riskier to develop.
However, Germany’s government is stepping up support for wind energy and lawmakers have recently agreed to stimulate more wind farms through higher electricity tariffs while lowering subsidies for the solar power industry.
Germany has one of the most developed wind energy sectors in Europe, where most projects have so far been onshore.
But this is set to change, with Wolfgang Tiefensee, the infrastructure minister, telling a German newspaper this month that the country should build up to 30 offshore wind farms that would compensate for an expected decline in energy from nuclear plants and help the country meet targets for renewable energy.
Other investors have already applied to build offshore wind farms as the number of available sites on land declines.
“This gets more important the more the price of oil rises. The amount of interest from investors shows that it is economically viable,” Mr Tiefensee told Die Welt.
The growth of wind energy is also prompting energy companies to spend more in transmission infrastructure. This month, RWE announced €2.2bn of investment to expand its German power grid, partly because more wind farms are being built farther from the main centres of population.
Blackstone, which declined to comment on its involvement in the energy project, has forged close links with Berlin after a €2.7bn purchase last year of a 4.5 per cent stake in Deutsche Telekom. The project in which Blackstone is investing will build an initial 80 turbines with a capacity of up to 400MW.
The German company that will go into partnership with Blackstone could not be reached for comment.
Copyright The Financial Times Limited 2008