Multi-Billion Dollar Offshore Wind Energy Investments from Apollo and CIP
The international investment community continues to see compelling investment opportunities in the offshore wind energy sector, with the respected Apollo-managed funds announcing they will invest $6.5 billion in the UK, while Copenhagen Infrastructure Partners is reported to be planning a $3 billion investment in the Philippines. The moves come despite the repeated headlines about the troubles in the offshore wind energy sector.
Danish developer Ørsted has struck a deal with Apollo to sell a 50 percent stake in the under-construction Hornsea 3 project, which will be one of the largest offshore wind farms ever built. Located in the North Sea, the project will have a total of up to 231 turbines and a capacity of 2.9 GW. Onshore work has been underway since 2023, with the project expected to be completed in 2027.
Ørsted reports that it chose to partner with Apollo in part for its ability to deliver a long-term, comprehensive equity and financing solution for the large-scale infrastructure project. It cites the investment group’s expertise and scaled capital, along with Ørsted’s strategy to divest of shares in projects to reduce risks, as the group faces deep financial troubles.
“The divestment represents an important milestone for Ørsted as we continue to deliver on our partnership and divestment program, which is a cornerstone of our business plan,” said Trond Westlie, Ørsted Group CFO.
The Hornsea 3 transaction is subject to regulatory approvals and is anticipated to close before year-end 2025. The Apollo Funds are expected to invest approximately $3.25 billion upon close, with the remaining $3.25 billion to be funded as the project reaches certain construction and development milestones in the coming years.
Apollo Partner and Co-Head of European Credit Leslie Mapondera noted that this is the latest large-scale transaction in Europe for the group, where it is investing behind energy infrastructure, transition assets, AI, and other key priorities. The investment in Hornsea 3 follows a series of recent large-scale capital solutions Apollo Funds have provided for European energy infrastructure, including a €3.2 billion investment to support expansion of the German energy grid, a £4.5 billion financing commitment to EDF for its Hinkley Point C nuclear power plant, and more than $4.5 billion of investments with BP in its TANAP and TAP pipelines.
While Apollo has been making large investments in Europe, President Ferdinand Marcos of the Philippines met with representatives of Copenhagen Infrastructure Partners today to discuss the company’s first offshore wind development in Southeast Asia. The Philippines reports that CIP will build a $3 billion offshore farm project south of Manila in the central Philippines. The project will be on the East Coast in the Philippine Sea.
The reports said CIP was attracted to the project because of the strategic location of the Philippines and the government’s commitment to shifting to renewable energy.
Orsted Still Sees a Strong Future for Offshore Wind in Europe
Western offshore wind leader Orsted sees signs of hope in the European market, despite near-term headwinds in the global market, executives said in a third-quarter earnings call on Wednesday.
"We remain very bullish about the prospects for offshore wind in Europe, in particular. We see the rebasing happening in the market," said Rasmus Errboe, Group President and CEO. "We will be patient, and we will prioritize value over volume."
Errboe highlighted three potential business areas for growth in Europe: maturing Orsted's existing pipeline of project options; partnerships and M&A for specific projects; and competing in centralized tenders. "2026 is probably going to be a bit on the low side in terms of numbers of tenders that are being put out there. But then from 2027 onwards it would take a bit of a step change," he said, highlighting expected leasing activity in the UK, the Netherlands, and Germany.
Equinor swung to a loss of $260 million in the third quarter, including impairment charges of about $175 million - a better result than analysts had expected, but a clear setback compared with last year's performance. Regulatory setbacks in the United States (including the stop-work order on Revolution Wind) and high American tariffs are among the firm's challenges.
To adapt to global challenges for offshore wind, Orsted's leaders have embarked on a muscular strategy to stabilize finances: since May, the firm has announced plans to lay off 2,000 employees; raised $9 billion in a heavily discounted rights issue; canceled the costly Hornsea 4 project; and sold half of its giant Hornsea 3 project for $6 billion to Apollo Global Management. The latter move is expected to raise enough cash to stave off a possible credit downgrade; one further drop from S&P could prompt some institutional investors to sell the company's bonds.
Many market analysts have speculated that a tie-up between Orsted and Norwegian state energy firm Equinor's offshore wind division would produce synergies and reduce competition, giving Orsted a leg up. For Equinor, divesting its renewables division would allow it to refocus on its core oil and gas business after a bruising experience with offshore wind in the United States. However, Errboe firmly ruled out the possibility.
"That is not in our plans," Errboe said. "Our focus, my focus, is to deliver on our plans, on our strategy, quarter by quarter."
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