Strategic Renewable Energy Consolidation: Apollo's Move into Hornsea 3 Wind Project

The recent acquisition of a 50% stake in the £8.5 billion Hornsea 3 wind farm by Apollo Global Management marks a pivotal moment in private equity's (PE) expanding role in clean energy infrastructure. This transaction, valued at approximately £4.25 billion, underscores Apollo's strategic pivot toward renewable energy and highlights the broader trend of PE firms capitalizing on the global energy transition. As Ørsted, the Danish energy giant, divests non-core assets to strengthen its balance sheet amid rising costs and supply chain bottlenecks, Apollo's entry into the UK's largest offshore wind project signals a recalibration of capital flows toward long-term, decarbonized infrastructure.

Ørsted's Strategic Divestment: A Response to Industry Pressures

Ørsted's decision to offload half of its stake in Hornsea 3 is part of a broader divestment strategy aimed at mitigating financial risks in the offshore wind sector. Rising material costs, delayed supply chains, and regulatory uncertainties have strained project economics, prompting Ørsted to seek external capital. By partnering with Apollo, Ørsted not only secures funding for the project's construction phase but also reduces its exposure to near-term volatility. The Danish firm has already secured government-backed contracts that increased electricity prices for part of the project by 45%Value of private equity-backed renewable investments hits 5-year high of $14.6b^[5], yet the need for liquidity remains acute. Financial advisors Bank of America and Credit Agricole are facilitating the deal, which is expected to close by 2025.

This move aligns with Ørsted's recent divestments, including a £1.75 billion stake sale to Brookfield in October 2024. Such transactions reflect a sector-wide trend: developers are increasingly partnering with PE firms to share risks and leverage their capital firepower. For Ørsted, the focus is on retaining control over its core operational assets while offloading developmental projects to entities with deeper pockets and longer investment horizons.

Apollo's Strategic Rationale: Scaling Renewable Energy Exposure

Apollo's investment in Hornsea 3 is emblematic of its broader energy transition strategy. The firm has committed $40 billion to climate-related investments since 2020Private Equity Reprioritizes for a New Energy Landscape^[1], with recent partnerships like its $3 billion collaboration with Standard Chartered to finance global infrastructure and clean energy projectsØrsted in talks to sell stake in £8.5bn UK wind project to Apollo^[4]. The Hornsea 3 stake, which will generate enough electricity to power over three million UK homesApollo and Standard Chartered Form US$3B Financing Partnership for Global Infrastructure and Energy Transition Credit^[2], complements Apollo's existing renewable portfolio, including a $400 million joint venture with Summit Ridge Energy to expand U.S. solar capacityApollo and Standard Chartered Form US$3B Financing Partnership for Global Infrastructure and Energy Transition Credit^[2].

The strategic logic is clear: offshore wind projects like Hornsea 3 offer stable, long-term cash flows through power purchase agreements (PPAs) and government subsidies. With a capacity of 2.9 gigawatts, the project is also scalable, allowing Apollo to leverage its infrastructure expertise to optimize operations and maintenance costs. Moreover, the UK's Renewable Energy Directive and the Inflation Reduction Act's U.S. incentivesEnergy Transition Investment Outlook: 2025 and Beyond^[3] create a regulatory tailwind, ensuring policy continuity for such investments.

Private Equity's Growing Influence: Trends and Implications

Apollo's move is part of a larger surge in PE investments in clean energy infrastructure. Between 2020 and 2025, global private equity-backed renewable energy transactions reached $14.58 billion in 2023 aloneValue of private equity-backed renewable investments hits 5-year high of $14.6b^[5], driven by declining technology costs and the electrification of industries like data centers and transportation. Firms such as Brookfield, KKR, and CIP have similarly expanded their renewable portfolios, with Brookfield's $7 billion acquisition of Neoen and KKR's $3 billion bid for Encavis highlighting the sector's appealPrivate Equity Reprioritizes for a New Energy Landscape^[1].

However, this rapid influx of capital raises critical questions. First, the risk of greenwashing—where investments are marketed as sustainable without meaningful decarbonization—remains a concern. A 2025 report by the Private Equity Climate Risks project warns that “false solutions” like carbon capture and gas certification could undermine climate goalsValue of private equity-backed renewable investments hits 5-year high of $14.6b^[5]. Investors must scrutinize projects for alignment with 1.5°C warming scenarios and avoid overreliance on transitional technologies.

Second, market dynamics such as high interest rates and supply chain bottlenecks could delay returns. While dry powder for renewable energy investments stands at $66.1 billionValue of private equity-backed renewable investments hits 5-year high of $14.6b^[5], valuations of publicly traded renewable developers have become more attractive for PE takeovers, suggesting a shift toward consolidation rather than greenfield projects.

Conclusion: A New Era of Energy Transition Finance

Apollo's stake in Hornsea 3 exemplifies the evolving role of private equity in financing the energy transition. By combining Apollo's capital and operational expertise with Ørsted's technical capabilities, the project could set a precedent for large-scale renewable energy partnerships. Yet, the success of such ventures hinges on navigating regulatory shifts, supply chain risks, and the imperative to avoid greenwashing.

For institutional investors, the lesson is clear: private equity's influence in clean energy is here to stay, but due diligence remains paramount. As the IEA notes, global electricity demand is projected to grow at twice the historical rate through 2030Private Equity Reprioritizes for a New Energy Landscape^[1], creating both opportunities and challenges for PE firms. Apollo's Hornsea 3 investment, while strategically sound, will need to demonstrate not just financial returns but also measurable climate impact to justify its place in the energy transition narrative.