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Due diligence for stake in world’s biggest wind farm

50% share for

AXA and Crédit Agricole hired K2 Management as their technical advisor when they bought a 50% share in the world’s biggest wind farm, Hornsea 2, for £3 billion. 

The 1.38GW Hornsea 2 wind farm entered full operation at the end of August 2022, with its 165 turbines helping to power more than 1.4 million homes in Great Britain. 

Lying 89km off the Yorkshire coast, the wind farm spans 462 square kilometres of sea. The project was so big that it was split into three 55-turbine sections, each with its own grid connection. Hornsea 2 also contains the world’s largest offshore sub-station and is connected to Great Britain’s national grid via a 130km cable. 

K2 Management carried out an initial red-flag review before proceeding into full due diligence, covering the wind farm’s consents, design, contractual package for construction and operation, and financial model.  

The deal marked the two investors’ entry into the offshore wind market and so K2 Management took a more active role to support its clients through each step in the process, from the initial red-flag analysis and full due diligence to energy yield analysis discussions and reporting requirements during operations. 

The wind farm’s size and complexity – with multiple contracts – meant the amount of paperwork to review went beyond the level for a normal offshore project. K2 Management highlighted this scope deviation to its clients during the earliest stages of due diligence, leading to a variation order that allowed reviewing the most important contracts to be prioritised. The contractual review took place during the construction phase, and so the process was streamlined by focusing on specific items, such as defect warranties, liquidated damages, and liabilities. 

Diego Chernichero Fernandez, a senior consultant at K2 Management, said: “Working on the purchase of this stake in the Hornsea 2 project was equally challenging and interesting. Reviewing the complex contracts generated by such a large project involved drawing on our vast expertise across a wide range of teams within the firm, so that we could give the very best advice to our clients.” 

We recognised the opportunity available in investing in Hornsea 2, but as our first foray into offshore wind we were looking for rigorous technical assistance in assessing the project. The support from K2M enabled us to progress with our investment, and we look forward to continuing to explore opportunities in the offshore wind sector in the future.
Hugo Brändström
Vice President, Infrastructure Equity