Munich Re acquires three UK wind farms from private equity firm

Reinsurer buys combined capacity of 102MW

German reinsurance giant Munich Re said it has acquired three onshore wind farms in the UK from London-listed private equity firm HgCapital for a sum “in the low three-digit euro millions.”

They are the 21MW Tir Mostyn facility in North Wales, the 16MW Bagmoor project in Lincolnshire and Scout Moor near Manchester, one of the largest in the UK with 65MW. Munich Re said the UK was an attractive venue for wind power investments owing to its climate and stable regulatory environment.

The acquisitions are part of Munich Re’s Renewable Energies and New Technologies (RENT) programme.

Under RENT, Meag, Munich Re’s asset manager, is investing €2.5bn over the mid-term in renewable technologies in Germany and Europe. Since RENT began in early 2011, Meag has invested around one-fourth of the dedicated volume.

“RENT is helping us to diversify the Munich Re portfolio with respect to sustainable investments that offer management risks and attractive returns,” said Meag managing director Holger Kerzel. All told, Meag manages €226bn in assets for Munich Re.

According to its website, Hg Capital is one of the biggest investors in UK onshore wind and a leading owner of onshore parks in Sweden. Prior to the sale of three parks to Munich Re, Hg Capital owned 19 wind projects in the UK with a capacity of 419MW. In Sweden, the firm owns two projects with 180MW in capacity.It has over £3.7bn (€4.7bn) under management from institutional investors such as corporate pension funds and public pension plans.

In related news, German development bank KfW said it would extend €100bn worth of loans by 2016 to finance the nation’s shift to renewable energies.

It comes as leading German economic think tank DIW has demanded that banks finance more of the country’s historic shift to renewables, saying they have offered little in return for being rescued during the financial crisis.

Since last summer, the government has embarked on a plan to replace nuclear power with renewables as a power source by 2020 and then have the latter account for 80% of electricity production by 2050. The government has put the cost of the plan, which includes the installation of renewable capacity as well as the building of new infrastructure, at €200bn for the next decade.

According to Berlin-based DIW, the costs are not being fairly divided. Through Germany’s renewable energy law (EEG), private households are picking up 40% of the bill. By comparison, banks and funds are providing 11% in financing.