Macquarie initially partnered with Norsk Hydro to develop and structure power purchase agreements (PPAs) that have helped the heavy industry player reduce its carbon footprint. This partnership has enabled the development of 1.3 GW of renewable energy capacity.2
More recently, MAM has been working with Norsk Hydro’s renewables business, Hydro Rein, in Brazil. Norsk Hydro was seeking a source of long-term renewable energy, at a stable price in US dollars, to supply its industrial facilities, Alunorte and Paragominas, which mine and refine alumina for global export.
With Brazil’s abundance of renewable energy sources, including wind and solar, strong decarbonisation commitments and a maturing regulatory environment, the country is becoming an increasingly attractive market for renewable energy development.3
The Ventos de São Zacarias project combines MAM’s renewables development and financing expertise with Hydro Rein’s experience in the Brazilian energy market.
Alongside co-development, MAM structured long-term inflation-linked US dollar PPAs between the Alunorte and Paragominas facilities and the project.
One of the PPAs enables Alunorte to switch its boilers from coal-fired to electric. This includes the installation of three electrical boilers for steam generation, which together have the potential to reduce emissions at Alunorte by 400,000 tonnes by 2025.4 Additionally, the nature of the US dollar- and inflation-linked PPA reduces exposure to both Brazilian currency and inflation risks, which have historically been a key obstacle to international investment in the country.
This helped Ventos de São Zacarias become the first US dollar-backed project in the country to raise financing without the aid of a development bank.5 Instead, a consortium of seven private sector banks – JPMorgan, HSBC, Citibank, BNP Paribas, SocGen, Natixis and Santander – will provide $US290 million of debt.
Hydro Rein’s Brazilian energy market expertise and regional presence, combined with our global wind and infrastructure experience, make for a strong partnership that can provide a boost to Brazil’s supply chain and ambitions to engage with the global wind opportunity.”
Global Head of MAM Green Investments
Macquarie Asset Management