Octopus Energy Group’s generation business, one of Europe’s largest investors in renewable energy, has worked with Nest to take a stake in the Hornsea One Wind Farm, the world’s largest operational offshore wind farm, making a positive impact with UK pension savers’ money.
Image Credit: Octopus Energy Group
Octopus Energy Generation’s fund management team invested £200m in Hornsea One on behalf of Nest, one of the UK’s largest pension schemes representing a third of the UK workforce. Through a joint venture with GLIL Infrastructure, who are also investing £200m, together they’ve acquired a 12.5% stake from Global Infrastructure Partners for a total of £400m*. GLIL is a £3.6bn fund investing in infrastructure on behalf of pension funds**.
The 1.2 GW Hornsea One wind farm is off the Yorkshire coast, harnessing the UK’s vast wind resources to generate green power for over a million homes. Its 174 wind turbines are 190m tall, larger than the Gherkin building. It’s operated by Ørsted, operational since 2020.
Offshore wind is a pillar of many European energy security strategies - and the UK the world’s top offshore wind market. The price of offshore wind has fallen to the cheapest it’s ever been***, which will help drive down energy bills.
Octopus entered the offshore wind sector recently and this deal marks its third, with more in the pipeline. It follows investments in Lincs Offshore Wind Farm in England on behalf of Octopus Renewables Infrastructure Trust (ORIT), the Borssele V Offshore Wind Farm in the Netherlands, and in floating offshore wind developer Simply Blue.
Octopus and Nest have worked together since last year when Nest appointed the entech business to help it invest billions in green energy on behalf of Nest’s 11 million pension savers. They’re expanding the relationship with this milestone offshore wind deal.
Zoisa North-Bond, CEO of Octopus Energy Generation, comments: “The UK is already a world leader in offshore wind but there is still so much more we can do. Harnessing the UK’s strong wind resources out at sea will help provide energy security and bring down energy bills. We’ve already made a splash in offshore wind after only entering this renewable technology earlier this year, and we have lots more coming up.”
Alex Brierley, Co-head of Octopus Energy Generation’s fund management team: “This latest deal is testament to the growing demand we’re seeing from institutional investors to invest in renewable energy. It’s brilliant to be expanding our relationship with Nest and starting a new one with GLIL to help pension savers’ money make a truly positive impact on people and the planet. The more we collectively invest in renewable energy, the faster we can shift to a greener, cleaner future.”
Stephen O’Neill, Nest’s Head of Private Markets: “Renewable energy sources have huge potential for long-term investors like Nest. Its desirability should only increase in the coming years and as the UK accelerates towards net-zero, we’re confident Hornsea One will deliver inflation beating returns and grow the money our members have invested. I’d like to thank Octopus Energy Generation and GLIL for helping us access this deal. It’s a fantastic opportunity and exactly the type of investment we want to be involved in.”
Daniel Hobson, Investment Director at GLIL Infrastructure and Head of Real Assets at Greater Manchester Pension Fund, said: “Offshore wind capacity plays a major role in the generation of renewable energy, so the potential of what is being developed here is vast. Our investment will not only support the UK’s energy transition and net-zero ambitions, and continue our track record in the renewable energy sector, it will also generate sustainable, long-term returns for millions of pension fund members. We’re now looking forward to working with Octopus Energy Generation on this joint venture and the team at Ørsted.”
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*Please note: the deal has been signed and completion is scheduled to take place by around October 2022.
**Please note: GLIL Infrastructure invests on behalf of pension funds and pools including Local Pensions Partnership Investments, Northern LGPS and Nest, the government- established DC workplace pension provider.
***UK offshore wind costs, July 2022, Carbon Brief