Ørsted to sell half of world’s largest offshore wind farm to Apollo in $6.5bn deal – Financial Times

Report on the Hornsea 3 Offshore Wind Farm Partnership and its Alignment with Sustainable Development Goals

1.0 Executive Summary

A significant financial partnership has been established for the development of the Hornsea 3 offshore wind farm, the world’s largest. Danish renewable energy developer Ørsted has agreed to a 50% equity stake sale to US private capital group Apollo in a $6.5bn transaction. This report analyzes the deal’s structure, strategic importance, and profound contributions to several United Nations Sustainable Development Goals (SDGs), particularly SDG 7 (Affordable and Clean Energy), SDG 13 (Climate Action), and SDG 17 (Partnerships for the Goals).

2.0 Project Overview and Contribution to SDG 7 & SDG 13

The Hornsea 3 project is a cornerstone initiative in the global transition to renewable energy, directly supporting key environmental SDGs.

• SDG 7: Affordable and Clean Energy: Upon its scheduled completion around the end of 2027, Hornsea 3 will have a capacity of 2.9 gigawatts, capable of supplying clean electricity to the equivalent of approximately 3 million homes. This substantially increases the share of renewable energy in the United Kingdom’s energy mix.
• SDG 13: Climate Action: Located 160km off the Yorkshire coast, the project is a critical component of the British government’s strategy to decarbonize its electricity system. By providing large-scale, zero-emission power, it represents a direct and impactful action against climate change.

3.0 Financial Partnership and Advancement of SDG 17

The agreement between Ørsted and Apollo exemplifies a powerful cross-border, public-private partnership essential for achieving the SDGs.

1. Mobilizing Private Capital (SDG 17): Apollo will fund half of the project’s remaining construction costs, demonstrating the critical role of private capital in financing large-scale sustainable infrastructure. This partnership model is vital for bridging the funding gap for global sustainability targets.
2. International Cooperation (SDG 17): The collaboration involves a Danish state-co-owned entity (Ørsted), a US private capital group (Apollo), and a project located in the UK, showcasing a multi-stakeholder partnership for sustainable development.
3. Strategic Divestment for Reinvestment: For Ørsted, this sale is a key part of its business model to fund subsequent renewable energy projects, ensuring a continuous cycle of investment in clean energy infrastructure.

4.0 Economic and Industrial Impact (SDG 8 & SDG 9)

The development and operation of Hornsea 3 provide significant contributions to sustainable economic growth and industrial innovation.

• SDG 9: Industry, Innovation, and Infrastructure: The project represents a major investment in resilient, sustainable energy infrastructure. It pushes the boundaries of offshore wind technology and reinforces the industry’s capacity for large-scale deployment.
• SDG 8: Decent Work and Economic Growth: The construction and long-term operation of a project of this magnitude stimulate economic activity and create jobs, contributing to sustainable economic growth in the region.

5.0 Navigating Challenges in the Renewable Sector

The successful financing of Hornsea 3 comes at a time when the renewable energy sector faces considerable headwinds, including rising interest rates and political uncertainty in key markets. Ørsted has previously encountered challenges, including project cancellations in the US. This successful partnership with Apollo underscores the resilience of the sector and the importance of securing diverse and robust funding mechanisms to overcome obstacles and continue the vital work of energy transition, thereby safeguarding progress towards the SDGs.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy

  The article focuses on the development of the Hornsea 3 offshore wind farm, a major renewable energy project. This directly relates to increasing the share of clean energy in the energy mix and ensuring access to sustainable power.

• SDG 9: Industry, Innovation, and Infrastructure

  The construction of the world’s largest offshore wind farm represents a significant investment in sustainable and resilient infrastructure. The project is an example of upgrading a nation’s energy infrastructure with clean technology.

• SDG 13: Climate Action

  The project is explicitly mentioned as a key part of the British government’s strategy to “decarbonise its electricity system by 2030.” Developing large-scale renewable energy is a direct measure to combat climate change by reducing reliance on fossil fuels.

• SDG 17: Partnerships for the Goals

  The article details a major financial partnership between Ørsted, a Danish company partially state-owned, and Apollo, a US private capital group. This international, public-private collaboration is crucial for mobilizing the financial resources needed for large-scale sustainable development projects.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 7: Affordable and Clean Energy

   • Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix. The article discusses the Hornsea 3 project, which, with its 2.9 GW capacity, will significantly increase the UK’s renewable energy generation.
   • Target 7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology… and promote investment in energy infrastructure and clean energy technology. The deal between the Danish firm Ørsted and the US firm Apollo to build a wind farm in the UK exemplifies international cooperation and investment in clean energy infrastructure.

2. SDG 9: Industry, Innovation, and Infrastructure

   • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure. The Hornsea 3 project is a large-scale, sustainable energy infrastructure project designed to provide reliable power.
   • Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable… with greater adoption of clean and environmentally sound technologies. The construction of a massive offshore wind farm is a direct upgrade of the UK’s energy infrastructure using clean technology to achieve sustainability goals.

3. SDG 13: Climate Action

   • Target 13.2: Integrate climate change measures into national policies, strategies and planning. The article states that the project is “an important part of the British government’s plans to decarbonise its electricity system by 2030,” showing the integration of climate action into national strategy.

4. SDG 17: Partnerships for the Goals

   • Target 17.17: Encourage and promote effective public, public-private and civil society partnerships. The partnership between Ørsted (50% owned by the Danish state) and Apollo (a private capital group) is a clear example of a public-private partnership to achieve a sustainable development goal.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. For SDG 7 (Affordable and Clean Energy)

   • Implied Indicator for Target 7.2: The article provides data points that contribute to calculating the renewable energy share. It specifies the project’s capacity (“2.9 gigawatt”) and its potential output (“enough power… to supply the equivalent of about 3mn homes”), which are quantitative measures of renewable energy generation.

2. For SDG 9 (Industry, Innovation, and Infrastructure)

   • Implied Indicator for Target 9.1/9.4: The financial investment in sustainable infrastructure is a key indicator. The article explicitly states the deal is valued at “$6.5bn” and that Apollo has struck “$17bn in energy infrastructure deals in Europe this year,” quantifying the investment being made.

3. For SDG 13 (Climate Action)

   • Implied Indicator for Target 13.2: While not a formal UN indicator, the article provides a specific national target: “to decarbonise its electricity system by 2030.” The 2.9 GW capacity of the Hornsea 3 project serves as a measurable contribution towards achieving this national climate plan.

4. For SDG 17 (Partnerships for the Goals)

   • Implied Indicator for Target 17.17: The article provides a direct measure for the UN indicator 17.17.1 (Amount of United States dollars committed to public-private partnerships). The deal is explicitly valued at “$6.5bn,” which is a quantifiable commitment to a public-private partnership for sustainable development.

4. Table of SDGs, Targets, and Indicators

Source: ft.com