According to Financial Times News, Danish energy company Ørsted has agreed to sell a 50% equity stake in the Hornsea 3 offshore wind farm to private capital group Apollo in a $6.5 billion deal. The 2.9 gigawatt project, located 160km off the Yorkshire coast, is scheduled for completion around the end of 2027 and will become the world’s largest offshore wind farm upon completion. Ørsted CFO Trond Westlie described Apollo as bringing “infrastructure expertise and scaled capital,” calling the sale an “important milestone” for the company. The deal comes as Ørsted faces significant challenges, including walking away from two major US projects in August 2023 due to rising costs and political pressure from the Trump administration. This strategic partnership reveals deeper industry trends worth examining.
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The New Capital Reality for Offshore Wind
This transaction underscores a fundamental truth about offshore wind’s evolution: these projects have become too large for even the world’s leading developers to finance alone. When a 2.9GW project requires bringing in private equity partners for $6.5 billion stakes, we’re witnessing a maturation of the industry where scale demands unprecedented capital deployment. Apollo’s record $17 billion in European energy infrastructure deals this year demonstrates that private capital sees massive opportunity in filling this funding gap. The traditional utility model of developing and operating projects entirely in-house is becoming increasingly untenable for projects of Hornsea 3’s scale, which will power approximately 3 million UK homes.
Ørsted’s Strategic Imperative
For Ørsted, this isn’t just another project finance deal—it’s a necessary strategic pivot. The company’s recent struggles in the US market, where it abandoned two major projects and faced political headwinds, created immediate liquidity pressures. Their business model of selling stakes to fund future projects works well in stable conditions, but becomes essential during periods of stress. The $9 billion rights issue last month combined with this Apollo deal represents a comprehensive capital preservation strategy. Ørsted is effectively saying they’d rather own 50% of multiple successful projects than 100% of projects that might never get built due to funding constraints.
Private Equity’s Infrastructure Play
Apollo’s move represents a sophisticated bet on energy transition infrastructure as a long-term asset class. Their simultaneous investments in Germany’s electricity grid with RWE and the Hinkley Point C nuclear plant demonstrate a diversified approach to energy infrastructure. For private equity firms sitting on massive amounts of dry powder, these projects offer attractive risk-adjusted returns with inflation-linked revenue streams through government power purchase agreements. Leslie Mapondera’s comment about providing “long-term and flexible capital solutions” suggests Apollo sees this as a relationship-building opportunity, not just a one-off transaction. They’re positioning themselves as the go-to capital provider for energy transition projects too large for traditional utility balance sheets.
Broader Industry Implications
This deal will likely set a precedent for how other major offshore wind developers approach project financing. Companies like RWE, Iberdrola, and Equinor will be watching closely to see if this partnership model provides the stability Ørsted needs to navigate current headwinds. The timing is particularly significant given the UK’s ambitious target to decarbonize its electricity system by 2030. If private capital becomes essential for hitting these climate goals, we may see more creative financing structures emerge across the industry. The question becomes whether other private equity firms will follow Apollo’s lead or if this remains a niche opportunity for the largest infrastructure funds.
The Risk Management Calculus
From a risk perspective, this deal represents a sophisticated sharing of development, construction, and regulatory risks. Apollo brings not just capital but infrastructure expertise that complements Ørsted’s technical capabilities. For Ørsted, reducing their equity exposure to any single project provides crucial insulation against further cost overruns or delays. Given the recent volatility in offshore wind economics due to supply chain issues and interest rate pressures, this risk-sharing arrangement makes strategic sense. It allows Ørsted to maintain their development pipeline while protecting their balance sheet from the full impact of potential future challenges.
