Coillte seeks out partner for €1bn wind energy development

Coillte, the State forestry agency, has appointed advisers to help it seek out a joint venture partner to develop over €1 billion of wind energy assets on its land. The company is also mulling the sale of its existing windfarm portfolio, which it values at up to €150 million, to fund its share of future development.

Coillte has appointed IBI Corporate Finance and UK-based advisory firm Capricorn to run the process to find a wind energy partner.

Fergal Leamy, Coillte’s chief executive, said the company will spend the next “couple of months” assessing options with its advisers, before launching a tender in January or February.

He said Coillte has identified up to 25 of its land parcels that are suitable for large-scale windfarms. It is likely that this will be concentrated down to “10 or 15” sites, upon which will be developed windfarms with the capacity to produce between 1 gigawatt and 1.2 gigawatts of power.

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This is almost four times the power output from Coillte’s existing portfolio of four built windfarms, plus a further two in planning stages. Around 1GW of capacity would also generate enough energy for more than one million homes.

Financial burden

Mr Leamy estimates that the development of the sites over the next 10 years will cost well over €1 billion, so Coillte wants to bring an industry partner on board to co-develop the windfarms and share the financial burden.

Coillte, he said, considers itself a windfarm developer, but is not interested in holding the assets for the long-term, preferring instead to develop then sell.

“Partnering with somebody is the right way to go,” he said. “If we developed it all ourself and held onto it, we’d be in danger of becoming a utility.”

Mr Leamy said one possible structure could be for Coillte to select, ideally, a single partner with which it would establish a joint-venture windfarm development company.

Both partners would then fund this JV company, which would develop the windfarms, although Coillte would retain ownership of the land.

“Holding onto the land is important for us. There will be no selling-off of the family jewels. We will only do long leases,” said Mr Leamy.

Coillte owns about 7 per cent of the land mass of the State.

Pre-emption rights

Its existing windfarm portfolio includes projects developed in a variety of partnerships, including with SSE, Bord na Móna and ESB. When asked if any of its partners had pre-emption rights to buy out Coillte's stake if it puts its existing assets up for sale, Mr Leamy declined to divulge the details.

“But the issue of pre-emption may arise in some of those projects. They’re not all structured the same way,” he said.

Its four existing windfarms have capacity of about 300 megawatts of power, and Coillte owns about 50 per cent of the projects. Mr Leamy estimated that their market value is “€2 million to €3 million per megawatt”.

“We have put €30 million of equity into those projects. Once you take out debt, we think our stakes are valued at more than €150 million.”

He said Coillte would consider the sale of some or all of its existing portfolio, depending upon the strategy agreed upon with its advisers. It would also consider retaining them, or putting them into the joint venture.

Mr Leamy said Coillte will also consider appointing more than one joint venture partner, if appropriate, although a single partner would be “ideal”.