Northland Power acquires a 49% interest in Baltic Power Offshore Wind Project
Northland continues to expand its European offshore wind footprint with a strategic partnership in Poland
Northland Power Inc. has announced that it has entered into an agreement with PKN ORLEN S.A. to acquire a 49% interest (subject to regulatory approvals) in the Baltic Power offshore wind project in the Baltic Sea (“Baltic Power”) with a total capacity of up to 1,200 megawatts (MW) of offshore wind generation.
Baltic Power is a mid-development stage project located approximately 23 kilometers offshore from Poland’s coast in the Baltic Sea. The project, which secured its location permit, signed its grid connection agreement as well as filed its environmental permit in 2020, allows Northland to capitalize on the growth in renewable energy demand in a growing Central European market. Inclusive of the purchase price, Northland expects to invest approximately PLN 290 million (CAD $100 million) towards the Baltic Power development in 2021, of which, some of this amount represents development expenditures that will be spent throughout 2021.
Mike Crawley, Northland’s President and Chief Executive Officer, said:
“Today's announcement reflects Northland's continued growth and leadership in renewable energy and strengthens our position as a global leader in offshore wind development. We are excited to partner with PKN ORLEN to expand our presence in Europe through the development of the Baltic Power offshore wind project, but more importantly, further contribute to the global decarbonization transition by helping Poland fulfill its renewable energy ambitions.”
PKN ORLEN is the largest company in Central and Eastern Europe and is publicly listed on the Warsaw Stock Exchange. The Company is part of the ORLEN Group, which has operations in six markets: Poland, the Czech Republic, Germany, Lithuania, Slovakia, and Canada. PKN ORLEN is a major player on the Polish energy market, with generation capacity of 3.2 GWe.
The Northland and PKN ORLEN partnership (collectively, the “Partnership”) will co-develop the Baltic Power opportunity that is expected to secure a 25-year Contract for Difference (CfD) offtake agreement, providing Northland an investment consistent with the company’s objectives of creating high-quality projects underpinned by revenue contracts that deliver predictable cash flows. Construction activities are scheduled to start in 2023 with commercial operations expected in 2026.
Baltic Power is a natural addition to Northland’s extensive offshore wind portfolio and provides the company with a new market to further enhance the geographic and regulatory diversity in its portfolio and cashflows. Currently, Northland has controlling interests in three operational offshore wind facilities in the North Sea, Gemini, Nordsee One and Deutsche Bucht farms with a total combined gross capacity of approximately 1,200 MW (890 MW net to Northland). Once complete, Baltic Power will substantially increase Northland’s total gross offshore wind capacity in Europe up to approximately 2,400 MW (1,500 MW net).
Poland’s draft energy policy foresees the need to add 10 to 12 GW of offshore wind capacity and an additional 15 GW of solar capacity by 2040 and the country’s recent passing of its Offshore Wind Act paves the way for Poland to develop offshore wind. This will result in a significant amount of investment into renewable energy generation. Once complete, Baltic Power will make a significant contribution to the future of clean and green energy production in Poland.