HONG KONG-based Cheung Kong Infrastructure (CKI) and affiliated company Power Assets Holdings are selling their Portuguese onshore wind power business Iberwind.
The two companies each hold a 50% stake in Iberwind via a UK joint venture. They are selling to pan-European renewable energy business Ventient Energy.
CKI and Power Assets Holdings acquired Iberwind in 2015. The company has 726MW of capacity across 31 wind farms in Portugal. It operates under a two-phase feed-in-tariff (FiT) regime with an initial 15-year fixed tariff, followed by a seven-year cap and floor price protection.
From 2020, Iberwind will transition out of the fixed tariff phase and revert to merchant pool price as of 2027, according to CKI.
In a statement CKI noted that merchant pool prices, unlike regulated tariffs, have relatively higher volatility. The business models of the two operating scenarios are different.
“The uniqueness of this Iberwind transaction lies in the different risk appetite with regards to future power pool prices,” says CKI chairman Victor Li.
“This unique scenario, plus the stated intention of the buyer, Ventient Energy, to provide continuity of employment to the team at Iberwind prompted us to accept this unusual divestment,” he adds, describing the move as rare since CKI does not have a policy of trading assets.
Closing of the sale is subject to the usual conditions, and must be approved by the Portuguese competition authority. The companies said that they expected closing to take place in the fourth quarter.
CKI says it stands to gain around HK$1.1 billion (US$141.9 million) from the sale, while Power Assets Holdings will post a gain of HK$800 million.