Colruyt Group is selling Parkwind, a company that builds offshore wind turbines, to Japanese energy company JERA. The Japanese will pay around 1,55 billion euros for the company.

Parkwind currently participates in, among others, four of the nine wind farms off the Belgian coast in the North Sea. Those four – Belwind, Northwind, Nobelwind, and Northwester 2 – together account for a capacity of 777 megawatts. That amounts to just over a third of Belgium’s offshore wind power or the annual consumption of 800 000 households.

Stronger competition

It had been known for some time that Colruyt Group was looking for a buyer for Parkwind. For the reason for that decision, the group refers to the greatly changed situation in the energy market due to, among other things, the Green Deal and geopolitical tensions as a result of the Russian invasion of Ukraine that are having an impact on the industry’s evolution rate.

For instance, there has been substantial growth in the size of offshore wind projects, bringing higher financial risks for investors. The increased focus on renewable energy creates strong competition, which in turn requires higher investments that only giant groups, such as Shell and TotalEnergies, with wealthy funds, can afford.

The Colruyt group calls the acquisition by JERA “an important milestone in the further development of Parkwind as a well-established Belgium-based global player in the energy sector”. JERA, where Flemish Nathalie Oosterlynck heads the offshore wind division, is “committed to supporting Parkwind’s national and international expansion plans”.

The company, which employs 5 000 people, wants to go from 2 to 20 gigawatts of capacity in renewable energy by 2030, of which 6 gigawatts will be offshore wind.

201 turbines

Parkwind, founded in 2012, participates in four operational wind farms located in the Belgian part of the North Sea: Belwind, Northwind, Nobelwind, and Northwester 2. Together they represent 201 turbines, accounting for 2,8 billion euros in investments.

It also does participate in a number of foreign wind farms. The company is currently still owned by Virya Energy, the energy holding company of Colruyt Group (some 60%), and the Colruyt family. It is currently the largest developer of offshore wind farms in Belgium.

Parkwind also has stakes in wind farms abroad, which are either already under construction and partially operational (e.g. Arcadis Out I off the German coast in the Baltic Sea) or under development (e.g. Oriel in Ireland), good for another 1,1 gigawatts. The company, which employs 130 people, all of whom remain on board, is also profiling and engaging in New Zealand and Australia.

Share 14% up

Yet the Colruyt Group will not completely disappear from the picture. Talks are ongoing to reinvest part of the proceeds “in a minority stake in Parkwind’s Belgian wind farms”.

The transaction is likely to be finalized in the course of the year following approval by the competent authorities. The completion will also lead to a very significant one-off positive impact on Colruyt Group’s consolidated net profit in the financial year 2023/24.

News of the sale already gave Colruyts shares the wind in their sails on the Brussels stock exchange on Wednesday. The share records a gain of over 14% shortly after the stock exchange opened to above 28%.

Still federal support

The ever-increasing offshore power generation also has an impact on electricity bills. Like the subsidies for investments in solar energy, the financial support for offshore wind farms is also passed on to the consumer.

Due to higher energy prices, 285 million euros less support from the federal government will be needed for offshore wind farms in the North Sea next year, according to calculations by energy regulator CREG.

However, for 2023, the federal government still needs to allocate 350 million euros to support offshore wind. This is because the very first parks received fixed support that does not depend on energy prices. These farms, including Belwind, Northwind, and Nobelwind, signed very long-term contracts, selling their power at very low prices but do not make excess profits.

No support

The five youngest wind farms, including Northwester 2, received support until 2022 that did depend on market prices. The idea is for the government to make up the difference until a certain reference level is reached at which investments are recovered by a certain margin. Current prices already provide enough revenue, so CREG is now setting the support for those five parks at zero.

But CREG also says the support should actually have been negative, meaning the wind farms would have to pay money to the government. Due to the current regulations, CREG cannot set a negative minimum price and demand recovery from the offshore parks if very high prices lead to excessive revenues.

The Belgian government and parliament have overlooked that scenario in the past. Due to the agreement in principle reached in December last year, the latest wind farms are, therefore, going to pay back some of the profits when power prices are high.