Partners Group has paid A$250 million ($186 million; €176 million) for a majority stake in Sapphire Wind Farm, a 270MW project under development in the Australian state of New South Wales.
The A$588 million project is backed by an A$330 million debt package comprising 17-year debt from Danish export credit agency EKF, 12-year debt from Australia’s Clean Energy Finance Corporation and 7-year debt provided by Commonwealth Bank of Australian and Japan’s Sumitomo Mitsui Banking Corporation.
The debt committed by CEFC added up to A$120 million. Local developer CWP Renewables retains a stake in the facility.
Sapphire Wind Farm has also secured a 20-year power purchase agreement for 100MW of its capacity with the Australian Capital Territory government. The rest of the project’s output will be traded on a merchant basis. Once completed in July 2018, the wind farm is set to generate enough energy to power 110,000 households.
“Project financing for large-scale greenfield renewable energy assets has generally seen a reluctance to take on price or merchant risk. With this area of financing still evolving, we have been pleased to work alongside other commercial financiers in the project to help demonstrate the bankability of such projects and give confidence to other developers seeking finance for projects which have an element of merchant risk,” said Andrew Gardner, who leads CEFC’s wind sector.
The firm and developer are also working on securing more PPAs for the capacity that remains uncontracted. “Our view is that given the current market conditions, it is better to take a degree of merchant risk in the early years of a project than in the later years,” Benjamin Haan, managing director and head of private infrastructure for Asia-Pacific at Partners Group, told Infrastructure Investor in a phone interview.
“Since the beginning of 2015, the Australian market has provided more regulatory certainty as far as renewable energy is concerned and thus has seen more activities in wind project development.”
Haan added that while the firm was interested in both solar and wind, it was easier to achieve scale in the latter. He said that Partners Group was looking to deploy around $200-300 million in each of the asset or platform it invests in.
The Sapphire deal follows Partners Group’s investment last year in the 240MW Ararat Wind Farm in Victoria. Once completed, the two projects will be the second- and fourth-largest wind farms in Australia respectively, with a combined capacity of more than 500MW.
Outside of Australia, the firm invested over $200 million to acquire a controlling stake in a Taiwanese solar power development platform in July this year, and also closed an investment in Merkur Offshore, a 400MW offshore wind farm project in Germany in August.