Purchase Of Offshore Transmission Cable Operation Business In Germany

Mitsubishi Corporation (hereafter "MC") has reached an agreement with TenneT Holding B.V. (hereafter "TenneT") to purchase a 49% equity stake in two German offshore transmission cable projects, BorWin1 and BorWin2, through its wholly owned special purpose company, on 9th February, 2012. The total project costs are approximately 120 billion yen (EUR 1.2 billion). The equity purchase represents a milestone transaction in Germany, allowing infrastructure investors to invest in a separate cluster of regulated assets.

TenneT and MC will develop the two offshore grids connections, which will have a total capacity of 1,200 megawatt and are located in the German North Sea. TenneT, as the majority owner, and MC will maintain and operate the approximately 400 kilometers length transmission cables and related transformers for at least 20 years, under the current German regulation.

The German government has targeted to double its renewable energy generation, mainly by offshore wind generation, from a current 17%, to 35% by the year 2020. The offshore transmission cables will contribute towards the goal, by transferring the clean electricity produced by offshore wind farms to the onshore grid in Germany. Further expansion of this kind of transmission operation business is expected to continue, together with the increase in the number of offshore wind farms.

Currently, TenneT is working on nine projects to connect wind farms in the German North Sea. These projects total to 5000 megawatt of renewable electricity, enough energy to supply 5 million households. Furthermore, TenneT is working in Germany on projects to improve north-south connections, necessary for the transport of electricity to the main consumption areas in the south of the country.

Infrastructure business is a strategic focus area for MC, as highlighted in its Midterm Corporate Strategy 2012, announced in July 2010. MC will continue to expand its presence in the offshore transmission cable operation business, paying particular attention to new projects in Germany and UK.

SOURCE: Mitsubishi Corporation