Greencoat Renewables signs 10-year power deal as AI fuels demand
Greencoat Renewables (GRP ) has signed a 10-year power supply deal with an Asian real estate trust that targets data centres.
The £1bn portfolio of eurozone renewable electricity generation assets has signed a decade-long power purchase agreement (PPA) with Keppel DC Reit.
Singapore-listed Keppel will purchase 100% of the electricity generated from Greencoat’s Ballincollig wind farm in Cork, Ireland. The farm has an annual output of 31.5 gigawatt hours (GWh). For context, one GWh could power around one million homes for one hour.
The PPA – the second Greencoat has signed with Keppel – will work on a ‘pay as produced’ basis. This means the trust will enjoy ‘escalating revenues through to 2036’, said Paul O’Donnell, partner at Schroders Greencoat and manager of the fund alongside Bertrand Gautier.
The new deal is part of a ‘recontracting strategy’ that started in December 2023, which aims to transition portfolio assets out of tariff regimes, with six PPAs written for over 540GWh of energy a year. This is equal to 20% of Greencoat’s energy volume over the next five years.
The contracts have an average length of eight years and have been signed with ‘leading international companies, including those in the artificial intelligence (AI) and heavy industry sectors which rely on clean energy to fuel future growth’.
There has been an uptick in demand for clean energy to provide the huge amounts of power to run the data centres that are crucial to the acceleration of AI.
O’Donnell said he sees ‘significant opportunity in the accelerating energy demand, driven by data centre growth and the broader AI-led digital economy’.
‘Data centres powered by renewable energy will be a key industrial enabler for the next phase of economic development,’ he said.
‘Greencoat Renewables is strategically positioned to deliver cost-effective, clean power, supporting the ambitions of our partners and contributing to sustainable economic growth.’
Elsewhere, Schroders Greencoat has been busy snapping up assets, purchasing a 24.5% stake in the West of Duddon Sands offshore wind farm from Orsted, the world’s largest offshore wind power developer, for £456m.
While the specific fund that purchased the stake has not been disclosed, the investment manager also runs the Greencoat UK Wind (UKW ) trust, which is the largest renewable infrastructure trust listed in London at £3.3bn.
Over the past three years, Greencoat Renewables’ shares are down 20.9%, which compares to a 24.1% fall by the average fund in the AIC’s renewable energy infrastructure sector. The trust currently yields 9% and trades at a 33% discount to net asset value (NAV).
