SSE and Greencoat tipped as potential buyers of Coillte’s wind farm stakes

Local players SSE Airtricity and Greencoat Renewables are tipped as potential buyers for the €125 million worth of wind power that State forestry company Coillte is selling.

Coillte said on Thursday that it is putting its stakes in four wind farms it built with the ESB, SSE Airtricity and Bord Na Móna, on the market for at least €125 million.

Fergal Leamy, Coillte's chief executive, confirmed that Irish and international bidders have said that they may be interested in buying the assets, although he did not name the potential purchasers.

Industry sources suggest that SSE Airtricity and Greencoat Renewables could bid for the Coillte businesses, along with overseas pension funds seeking to invest in wind energy, which gives guaranteed long-term returns.

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SSE and Coillte jointly built Cloosh Valley wind farm in Co Galway, one of the assets that the State company intends to sell. Greencoat has up to €520 million to spend on buying renewable energy projects.

It earned €270 million from selling its shares on the Dublin and London stock markets last year while its banks have agreed to lend it up to €250 million.

Greencoat recently paid €22.5 million for Lisdowney wind farm in Co Kilkenny, which can produce up to 9.2 megawatts of electricity, enough for about 9,000 homes.

Strong market

Mr Leamy stressed that the company expected to get no less than €125 million for its share of the farms. “The market is exceptionally strong at the moment,” he said.

“There is a big pool of capital out there, people are looking for high-quality assets that will give them a reasonable risk-adjusted return, a lot of investors see Ireland as an investable place, a very stable place for renewable energy assets.”

The Government’s Refit scheme, funded by a levy on electricity bills, guarantees the revenues that the four wind farms earn.

Coillte invested €25 million in the wind-powered electricity plants that it is selling, 50 per cent of Raheenleagh in Co Wicklow and Castlepook in Co Cork, which it built with the ESB, its half share in Cloosh Valley and 25 per cent of Co Roscommon’s Sliabh Bawn, developed with Bord na Móna.

They produce enough power to supply electricity to more than 100,000 homes when they are running at full capacity.

Coillte plans to reinvest some of the cash from the sale in building further wind farms and renewable energy projects with other partners. Those projects will not benefit from Refit, as that only applied to developments begun up to last year.

Energy projects

As a result, Mr Leamy expects lower returns than from those the company plans to sell. However, he pointed out that future energy projects could still return 10 per cent a year, compared with the 20 per cent from those now on the block.

Coillte’s chief executive emphasised that the company remained focused on its core businesses, forestry and manufacturing.

It will invest some of the sale proceeds in these businesses, use another portion to repay debt to help shore up its financial position against potential shocks such as Brexit and to pay a dividend to the State.

Coillte will also receive rent from the wind farms it is selling as they are built on its land. The company only uses land not suitable for commercial forestry for its energy business.