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Innovating new structures for renewable energy projects

The EU has ambitious climate and energy targets for 2030, aiming to provide affordable, secure and sustainable energy. To date, government subsidies have been used to keep the price of renewable energy competitive and encourage lenders to commit development capital to projects.

Increasingly, European governments expect renewables projects to be commercially viable in their own right, which is requiring a new approach to financing.

Addressing uncertainty - the key to success

The Markbygden Ett project in northern Sweden is Europe’s largest single-site onshore wind farm. Located close to the Arctic circle, the project will utilise 179 of GE Renewables’ 3.6MW turbines, which are optimally equipped for the site’s wind speeds and climate.

To make it financeable, the project needed a buyer to commit to a substantial portion of the energy the wind farm would produce. We negotiated a power purchase agreement (PPA) with one of the world’s largest aluminium manufacturers, Norsk Hydro, which will buy a fixed volume of energy from Markbygden over 19 years to power its smelters. It is the largest known PPA in the world in the renewables space.

In addition, we committed ~€160 million of our own capital to acquire 50 per cent of the project, alongside GE Capital.

This project is a landmark transaction on many fronts and represents the new frontier in European onshore wind. It demonstrates that in the right market, with the right location, the right technology and the right partners, it is possible to develop and attract private capital into new onshore wind farms.

Edward Northam, Head of Green Investment Group in Europe