Glennmont Partners has bought half of Orsted's 253 MW Gode Wind 3 offshore wind farm in the German North Sea. It is the second time in two years the same buyer has taken 50 percent of an Orsted wind farm in the German North Sea. The first time, it paid far less per megawatt. The two deals are built the same way, so the gap needs explaining.
Key takeaways
- Orsted signed an agreement on 17 October 2023 to sell a 50 percent stake in the 253 MW Gode Wind 3 offshore wind farm in Germany to Glennmont Partners for a total consideration of $498.45 million. The transaction completed on 5 December 2023.
- The $498.45 million Gode Wind 3 consideration covers both the purchase of a 50 percent ownership stake and Glennmont's commitment to fund 50 percent of the wind farm's construction costs.
- Grossed up to 100 percent, the Gode Wind 3 transaction values the wind farm at about $3.94 million per MW, compared with about $2.98 million per MW for Glennmont's October 2021 purchase of 50 percent of Orsted's 900 MW Borkum Riffgrund 3 for $1.34 billion.
- Gode Wind 3 sells its power under the German feed-in tariff regime awarded in 2017 and 2018 at a weighted average price of $91.5 per MWh, while Borkum Riffgrund 3 was awarded at EUR 0 per MWh in the same 2017 and 2018 awards.
- Glennmont Partners is a European clean energy fund manager owned by Nuveen, and it also co-owns the Gode Wind 1 offshore wind farm with Orsted.
What exactly does the $498 million buy?
It buys half the wind farm and half the cost of finishing it. Orsted's two farm-downs to Glennmont bundle two things into one headline number: the price for the shares, and a commitment by the buyer to pay its share of the construction contract. The record states this directly for Gode Wind 3. The $498.45 million covers the 50 percent stake and 50 percent of the construction expenses.
That makes the figure closer to an all-in cost of ownership than a share price. It also makes it comparable with Orsted's earlier deals, which use the same structure. The Borkum Riffgrund 3 transaction in 2021 also combined a 50 percent stake with a commitment to fund 50 percent of the payments under the engineering, procurement and construction contract.
Gode Wind 3 itself is a merged project. Gode Wind 3 and Gode Wind 4 were awarded to Orsted in 2017 and 2018, merged in September 2019 and built as one project 32 km from the island of Norderney. It was being built alongside Borkum Riffgrund 3 and was expected to enter commercial operation in 2024.
Why is the price per MW so much higher than Borkum Riffgrund 3?
The clearest difference is that one project has a state-backed tariff and the other does not. Gode Wind 3 sells its output under the German feed-in tariff awarded in the 2017 and 2018 auctions, at a weighted average of $91.5 per MWh. A feed-in tariff is a fixed price per unit of power guaranteed by the state, and German offshore tariffs typically run for 15 years. Borkum Riffgrund 3 was awarded at EUR 0 per MWh, a zero-subsidy bid, so it earns only what it can sell its power for.
Orsted solved that for Borkum Riffgrund 3 with contracts instead. It designed a 20-year offtake agreement giving Glennmont a mix of fixed and collared prices for 15 years on most of its volumes, and signed corporate PPAs with Covestro, Amazon, REWE, BASF and Google. By closing, 786 MW of the 900 MW was contracted. That is real revenue support, but it is commercial rather than state-backed, and some volumes were left exposed to market prices.
The result is a gap of about 32 percent per MW between two deals with the same buyer, the same seller, the same structure and projects built alongside each other. A state-backed tariff at $91.5 per MWh is likely worth more to an institutional buyer than a portfolio of corporate contracts. Gode Wind 3 is also later in its build, which removes some construction risk compared with Borkum Riffgrund 3 at the ready-to-build stage. Leap's records support both explanations but do not split the premium between them.
Enerdatics records 25 German offshore wind transactions between January 2021 and June 2024, of which 12 carry a disclosed value. Grossed up to a 100 percent basis, the operating asset deals range from $3.60 million per MW, for two 2023 stake sales in the 288 MW Butendiek wind farm, to $4.24 million per MW for Enbridge's 24.5 percent of Hohe See and Albatros. Energy Infrastructure Partners' 49 percent of Iberdrola's 350 MW Wikinger in 2022 grosses up to $4.11 million per MW. Among projects not yet operating, Masdar's 49 percent of Baltic Eagle prices at about $3.70 million per MW, while EnBW's 49.9 percent sale of He Dreiht and Borkum Riffgrund 3 sit near $2.9 to $3.0 million per MW. Gode Wind 3, at $3.94 million per MW, prices like an operating asset while still under construction.
What does the deal signal for German offshore wind?
It signals that subsidy vintage can matter as much as build stage. A German offshore project with a feed-in tariff changed hands at an operating asset price while still under construction. Its zero-subsidy sister project needed a stack of corporate contracts to reach financing and still priced about a quarter lower per MW.
It also shows Orsted's farm-down model at work. On Borkum Riffgrund 3, Orsted sold half to a financial investor before completion while keeping the full-scope construction contract and 20 years of operations and maintenance. Masdar's entry into Iberdrola's Baltic Eagle at a $1.76 billion valuation shows other utilities doing the same.
The tariff question runs both ways. A subsidy that lifts a project's price during its supported life also defines when value drops away, as with Germany's first offshore wind farm changing hands as its tariff fell away. Glennmont's owner Nuveen has also been buying operating offshore wind in the Netherlands, including a 15 percent stake in Borssele III/IV from Partners Group.
Frequently asked questions
How much did Glennmont pay for its stake in Gode Wind 3?Glennmont Partners agreed to a total consideration of $498.45 million for a 50 percent stake in Orsted's 253 MW Gode Wind 3. The figure includes Glennmont's commitment to fund 50 percent of the construction costs.
What price does Gode Wind 3 receive for its power?Gode Wind 3 sells its power under the German feed-in tariff regime awarded in 2017 and 2018, at a weighted average price of $91.5 per MWh. German offshore feed-in tariff contracts typically run for 15 years.
When did the Gode Wind 3 sale complete?Orsted signed the agreement on 17 October 2023 and the transaction completed on 5 December 2023. Hengeler Mueller advised Orsted and Linklaters advised Glennmont.
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