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Business deals

Thai power generator buys wind projects in Germany and Vietnam

Gulf Energy targets growing global decarbonization trend with overseas expansion

Gulf Energy Development plans to spend 140 billion baht ($4.5 billion) on expanding its business between 2020 and 2024.   © Reuters

BANGKOK -- Thai electricity company Gulf Energy Development has acquired a wind power project in Germany and another in Vietnam in the space of a week, targeting the growing global trend towards decarbonization.

Gulf Energy Development announced on Tuesday that its wholly-owned subsidiary Gulf International Holding had entered a share purchase agreement with New York-based infrastructure investor Global Infrastructure Partners to acquire 100% of Borkum Riffgrund 2 Investor Holding, based in Frankfurt, for more than 548 million euros ($618 million). The contract came into effect on July 3.

The purchased company owns a 50% interest in Borkum Riffgrund 2 Offshore Wind Farm, which is located in the German North Sea and has an installed capacity of 464.8 megawatts per hour. The project has been operating commercially since April 2019, under a 20-year operation and maintenance agreement with Danish offshore wind farm player Orsted, which owns the other 50% of the project.

Gulf Energy Development CEO Sarath Ratanavadi told local media in June that it was the right time to negotiate new deals with companies in the renewable energy sector in Europe and Asia with interest rates on the decline all year. "We're looking for operating assets because they offer quick investment returns," he said. The German investment fits these criteria.

The transaction will initially be funded by a bridging loan from a Thai bank. The company plans to refinance this loan through the issuance of debentures and/or long-term loans from financial institutions.

According to Gulf Energy Development Chief Financial Officer Yupapin Wangviwat, the company plans to spend 140 billion baht ($4.5 billion) on expansion of its business between 2020 and 2024. But the new investment in Germany comes from 40 billion baht of capital expenditure set aside separately earlier this year. 

The International Energy Agency in June said onshore wind power generation capacity could nearly triple from 1.3 petawatts per hour in 2019 to 3.7 petawatts per hour in 2030, while offshore generation could grow nine-fold from 67 terawatts per hour in 2018 to 606 terawatts in 2030.

Gulf Energy Development also announced on July 2 that its subsidiary would purchase two projects in Vietnam for approximately $200 million. It is entering into a share purchase agreement with Dien Xanh Gia Lai Investment Energy Joint Stock, developer and future operator of wind farm projects Ia Pech 1 and 2. Both projects are expected to begin construction in 2021 and to start commercial operations by the end of 2022. Each is expected to generate 50 megawatts per hour, totaling 100 megawatts per hour.

The Gulf group started out as Golf Holding in 2007. Gulf Energy Development was founded in 2011 and listed on the Stock Exchange of Thailand in 2017.

As of January 2020, the company had installed power generation capacity of 5.9 gigawatts per hour, of which 2% is from renewable energy. The rest comes from gas-fired plants. It aims to raise its total power generation capacity to 13.8 gigawatts per hour by 2027, with 3% of that coming from renewables.

The company has already invested in renewable energy projects in Vietnam, both solar and wind. It had announced that the first of the eight phases of its Mekong Wind Power Project would be delayed as a result of the COVID-19 outbreak. Its date for the start of commercial operations will now be in May 2021, after it had planned to start within 2020. The company has insisted that the rest of its schedules will remain in place, with full operations set for 2021.

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