San Giorgio Group Case Study: Walney Offshore Windfarms

The Walney Offshore Windfarms project, the world's largest installed offshore windfarm at the start of 2012, overcame significant investment barriers through a dual approach. First, the UK government provided a robust policy framework centered on green tradable certificates (ROCs), which provided approximately 60% of expected project revenues. Second, the developer, DONG Energy, employed extensive financial engineering to 'de-risk' the investment for non-utility investors, such as the Dutch pension fund PGGM and Ampère Equity Fund. By using Power Purchase Agreements (PPAs), construction management agreements, and vendor financing, DONG Energy reallocated construction, operation, and price risks away from these institutional investors, effectively transforming their equity stakes into quasi-fixed income positions. The project attracted GBP 1.3 billion in private investment and is projected to avoid 8.3 MtCO2 and 193,000 tons of SO2 over its lifetime.

• The Walney Offshore Windfarms project was the largest installed offshore windfarm in the world at the beginning of 2012, with a total capacity of 367.2 MW.
• The project's viability relied heavily on the UK government's policy framework, specifically the issuance of two Renewable Obligation Certificates (ROCs) per MWh generated, which are estimated to provide over 60% of the project's levelized revenues.
• The project attracted GBP 1.3 billion in private investment, which was roughly matched by the GBP 1.3-1.5 billion in discounted associated revenues redirected by the UK government via incentives.
• DONG Energy used financial engineering to attract non-utility investors by transferring construction, operation, and price risks to parties better equipped to manage them, effectively creating a 'de-risked' investment.
• The financial structure for non-utility investors, specifically the OPW consortium, transformed equity stakes into a quasi-fixed income position through the use of 15-year fixed-price Power Purchase Agreements (PPAs).
• DONG Energy provided critical early-stage support to the Dutch financial investors (OPW) through vendor financing, including a GBP 144 million bridge facility and mezzanine facilities, to facilitate their acquisition of a 24.8% stake.
• The project is projected to deliver significant environmental benefits over its 20-year lifetime, including the avoidance of 8.3 million tonnes of CO2 and 193,000 tonnes of SO2.
• The project-level internal rate of return (IRR) is estimated to be between 7.7% and 10.0%, which falls within the typical benchmark range of 4-13%.
• The UK government is expected to collect approximately GBP 400 million in taxes related to the project.

APA

Hervé-Mignucci, M. (2012). San Giorgio Group Case Study: Walney Offshore Windfarms. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2013/02/Walney-Offshore-Windfarms.pdf

Chicago

Hervé-Mignucci, Morgan. San Giorgio Group Case Study: Walney Offshore Windfarms. Climate Policy Initiative, 2012. https://www.climatepolicyinitiative.org/wp-content/uploads/2013/02/Walney-Offshore-Windfarms.pdf.

Wikipedia

{{cite report |last1=Hervé-Mignucci |first1=Morgan |title=San Giorgio Group Case Study: Walney Offshore Windfarms |publisher=Climate Policy Initiative |date=June 2012 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2013/02/Walney-Offshore-Windfarms.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hervmignucci2012san, author = {Hervé-Mignucci, Morgan}, title = {{San Giorgio Group Case Study: Walney Offshore Windfarms}}, institution = {Climate Policy Initiative}, year = {2012}, month = jun, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2013/02/Walney-Offshore-Windfarms.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }