The second phase of Polish offshore wind is entering an exciting stage. It is not only the start of permitting and strategic decisions of early development but also the partnering processes that are essential in this scale investments. Theoretically, there are 10 offshore greenfields in the transaction pool with a total capacity of about 9GW. Openness to cooperation is announced by both PKN Orlen and Polska Grupa Energetyczna, owners of 5 seabed permits each (PSZW).
1. Although, there are only 2 holding companies, the business foundation may be affected by the current structure and dependencies in the groups. At the same time, individual SPV’s include different waters, with different risks and challenges. In addition, it should be remembered that both Vendors have assets in the first phase, which further differentiates them.
2. The individual approach to each project will result in the variety of business models considered. From the first phase, we know that it is possible to have a 50/50 JV at the project level (example: PGE/Orsted or Polenergia/ Equinor), a consortium with varying shares (example: PKN Orlen/Northland Power) or a global partnership involving a wide variety of wind farms, like Ocean Wind. These include solutions involving more than 2 partners, or contingent shares that vary over time, depending, for example, on the milestone achieved.
3. There are two key areas of cooperation in the partnership: capital and project. While the first is quantifiable, comparable or analyzable in terms of synergies, the development one, no less important, is not so obvious. It is important for both sides of the transaction to thoroughly analyze their own resources as well as those of the potential partner in the context of a specific project, in detail of all its stages. Awareness of contributed competencies and resources in relation to precise project needs will significantly strengthen competitive advantages.
4. At the same time, we must not forget the geopolitical context, and the surrounding conditions in the form of offsets, for example. Offshore wind energy is part of the region’s energy transition, making the EU less dependent on fossil fuels and building supply chains. Offshore wind partnerships require a broader view on different levels, not just energy.
5. In a challenging market environment, ESG is growing in importance. Compliance, standardization of projects and their stakeholders resounds especially at the financing stage. An active and valuable co-developer, on the other hand, can already address its contribution in this area at the partnership stage.
6. Partnership is a commitment of difficult but, above all, long-term cooperation. The partnership process itself in the first phase of offshore wind power in Poland in its official part took 2-3 years. If to this we add permitting requiring acceleration and design improvements, it may turn out that further points can be won by patient, but at the same time experienced and successful partner candidates. The main competition under time pressure will involve the environmental decision, participation in the CfD auction, terms and conditions and connection agreement, and financing.
7. In the stakeholder analysis, it is worth looking at other users of the sea in addition to the administration. In addition to the intensity of use of the given bodies of water for fishing, neighboring wind projects are important, which has a significant impact on partnership processes, but also on developer risks.
8. Whether the process of selecting partners will be very formalized or a kind of “beauty contest” it is necessary to prepare for it. Both on the side seeking and the one offering to join.
9. Recognizing the details and accurately assessing the differences between projects will create a ranking list, giving directional guidance on strategy, synergies brought but also potential competition. After all, one can compete for partnership in the most interesting project, or in the one that seems the most difficult. The main thing is to do it consciously and according to plan.
At Ambiens, we provided environmental and permitting advice to Northland Power during its partnership with PKN Orlen in Baltic Power, a Phase I project. In the same project, we later acted in a pioneering role in Poland as independent advisor to a consortium of 25 lenders on environmental and social issues during due diligence at the financing stage. In the second phase, we developed a multi-criteria comparative analysis of available basins to further advise potentially interested global investors. We were responsible for developing applications for location decisions (PSZWs) for Shell, which acquired all required administrative opinions.