TNB’s stake in English windmill to improve expertise
KUCHING: Tenaga Nasional Bhd’s (TNB) unit, Vantage RE Ltd, has acquired a 49 per cent stake in an offshore wind farm company, Blyth Offshore Demonstrator Ltd (BODL) from EDF Renewables, a subsidiary of the French utility company, Électricité de France (EDF).
The acquisition marks TNB’s maiden entry into the international offshore wind market as BODL currently owns offshore wind assets off the coast of Blyth, Northumberland, England.
The assets include five turbines with a total installed capacity of 41.5MW (Blyth 1) and further development rights for a floating offshore wind project of up to 58.4MW (Blyth 2) off the Northumberland coast.
“This landmark acquisition is one of the planned strategic acquisitions for TNB to accelerate its journey in delivering on its global Environmental, Social and Governance (ESG) vision,” TNB president and chief executive officer Datuk Baharin Din said in a statement.
Although the investment in BODL is only an associate stake, AmInvestment Bank Bhd (AmInvestment Bank) viewed it positively as the acquisition would help expand TNB’s exposure to renewable assets and improve its expertise in managing wind companies.
“Including the 300MW Nenggiri hydroelectric power plant, which was secured in September 2021, we estimate TNB’s renewable assets portfolio to be 3,706MW (excluding the 49 per cent stake in BODL as it is only an associate),” it recapped.
“TNB did not disclose the purchase consideration for BODL. However in March 2020, we estimate that TNB paid about 3.6 million pounds per MW to acquire the balance 20 per cent stake in its wind assets in the UK.
“Based on the cost of 3.6 million pounds per MW, we estimate the purchase of a 49 per cent stake in BODL to be about 73.2 million or RM420.2 million.
“We do not expect BODL’s earnings contribution to be significant as TNB’s shareholding is only 49 per cent and BODL’s capacity is small at 41.5MW.”
As at end-FY20, TNB’s effective energy generating capacity stood at 13,857MW. In FY20, hydro accounted for 3.8 per cent of Peninsular Malaysia’s generating mix while solar accounted for another 0.7 per cent.
Currently, TNB has close to 450MW of renewable energy (RE) assets in the United Kingdom.
Although this is a small venture with effective installed capacity of 49MW only when the floating offshore wind project is completed, the team at Kenanga Investment Bank Bhd (Kenanga Research) said this was a good start as this strategic partnership with EDFR sets the pace for Vantage RE to grow in the UK and Europe.
Currently, TNB has two RE assets in the UK, which are undertaken by Vortex Solar and Tenaga Wind Ventures.
“Both assets are now structured under Vantage RE which was set up in July this year. With this offshore wind farm acquisition, TNB will be operating close to 450W of RE investments in the UK. Enough financial strength to take RE expansion,” it added.
To recap, TNB has set to achieve RE assets of 8,300MW by 2025 from 3,406MW currently, with RE making up 10 per cent of group revenue from five per cent currently.
“While there is no disclosure of acquisition price for BODL, it has budgeted RM6.5 billion for the entire RE capacity expansion whereby more than 97 per cent of these are from two geographical areas, 2,733MW in UK/Europe and 1,800MW Southeast Asia with only 361MW expansion locally.”