PPA with aluminium company underscores new wind farm for Sweden

The Scotland-based Green Investment Group (GIG), which started life in 2012 as the UK government-backed Green Investment Bank and is now part of the Macquarie Group, is providing €270mn of funding for a new 235 MW onshore wind farm to be built in central Sweden. Unusually, the project is to include  a 29-year fixed-volume power purchase agreement (PPA)  with Norsk Hydro, one of the largest aluminium companies in the world.

The proposed wind farm, developed by GIG and SCA Energy, will comprise 56 Siemens Gamesa 4.2 MW turbines with a tip height of 220m – placing it among Scandinavia’s tallest structures. It will be located at Länsterhöjden & Storflötten, in the Swedish county of Västernorrland.

Through its partnership with SCA, GIG has commercialised and financed the project through development to financial close. The transaction is the latest in GIG’s relationship with Norsk Hydro, following the  650 MW Markbygden Ett wind farm – Europe’s largest onshore wind power project – last year.

GIG will own 100% of the equity in the project, while Macquarie Capital (Europe) acted as financial adviser. Siemens Gamesa will provide operation and maintenance services through a 25-year agreement.

Construction of the wind farm is due to commence imminently and is expected to be completed by December 2019.

Mark Dooley, Global Head of Green Energy for Macquarie Capital and GIG said: ‘This project is the latest to utilise a new investment model: developing new projects by working with companies who want to buy renewable energy directly. This model provides the secure revenues needed to finance renewable energy assets with less and less reliance on public subsidy.’

In related news, the latest statistics from the wind association WindEurope reveal that 4.5 GW of wind energy capacity was installed in the first half of this year – down by 1.6 GW on the same period last year.

Onshore wind saw the biggest growth, led by Germany (1.6 GW), France (605 MW) and Denmark (202 MW). The UK ranked 16th in the survey, with just 13 MW of new onshore capacity.

The 1.1 GW of offshore wind capacity installed last year was mainly concentrated in the UK (911 MW), Belgium (175 MW) and Denmark (28 MW). Also highlighted in the report are Germany’s plans to install new offshore wind farms in the second half of 2018.

Overall, the report anticipates the installation of 13.5 GW of new onshore wind capacity and 3.3 GW of new offshore capacity across Europe for the whole of 2018.