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Ørsted mulls stake in Polish offshore wind farms planned by PGE

Danish utility Ørsted A/S is in talks with Poland's state-controlled PGE Polska Grupa Energetyczna SA to buy a 50% stake in two planned offshore wind farms in the Baltic Sea, the companies disclosed on Oct. 22.

PGE, Poland's largest utility, has been looking for partners to develop two projects off the Polish coast with a combined capacity of up to 2.5 GW — which would be among the first in the country — and had announced last December that it was considering more than a dozen companies for closer negotiations.

The group plans to sell 50% stakes in the two special purpose vehicles that are developing the projects and then operate them as a joint venture. The capacity is split between the 1-GW Elektrownia Wiatrowa Baltica-3 wind farm, planned to come online by 2026, and the 1.5-GW Elektrownia Wiatrowa Baltica-2 project, slated for 2030.

As the largest operator of offshore wind farms globally, Ørsted is an obvious fit. The former oil and gas producer has transformed itself into one of the largest renewable utilities over the past decade and expects to have 7.45 GW of offshore wind power in operation by 2020.

For PGE, the offshore wind farms form part of a broader strategy to start investing in renewables, in part to hedge an existing generation portfolio that continues to rely heavily on coal and gas.

Meanwhile, PGE's main rivals in Poland are also moving ahead with their own offshore wind plans. Oil producer PKN Orlen SA has started environmental tests for a planned 1.2-GW project and announced a cooperation agreement with PGE in September, which will see the two companies share information and work together on supply chain management and connection infrastructure.

And Norwegian oil major Equinor ASA has bought into several projects under development by Polenergia SA, another Polish utility.

The Polish government has come up with a draft legal framework for offshore wind development in the country, which is due to be discussed in parliament following elections earlier this month.

Henryk Baranowski, president of the management board at PGE, said in an interview on the sidelines of the BNEF Summit in London on Oct. 21 that the plan so far was "according to our needs," although it was too early to say what the final version would look like.

"At the moment, we are still waiting," he said.

A spokesperson for the company said on Oct. 21 that PGE is aiming to make a final decision on its offshore development partner before the end of the year.