BlackRock Real Assets has agreed to buy Guleslettene, a construction-ready wind project that will be built on the west coast of Norway and which has already secured a 15-year power-purchase agreement with aluminum producer Alcoa, the second-largest power consumer in the country.
BlackRock is funding the investment through Global Renewable Power II, a vehicle the firm closed on $1.65 billion last July and which is now more than 75 percent deployed. In addition to BlackRock’s equity, DekaBank Deutsche Girozentrale is providing €140.8 million in long-term debt financing to cover the €200 million the 197.4MW wind farm is estimated to cost.
Norwegian wind farm developer and operator Zephyr will manage construction and the project once it is operational, on behalf of BlackRock, according to a statement. The Norwegian Export Credit Guarantee Agency (GIEK) is providing a power-purchase guarantee of €88 million for Alcoa Norway’s payment obligations under the power-purchase agreement.
Guleslettene is the second Norwegian wind farm BlackRock has acquired through GRP II. The fund comprises a diversified portfolio of 12 investments, with the majority of assets – 45 percent – in North America, around 30 percent in Asia-Pacific, and approximately 25 percent in Europe, Sverker Akerblom, director and portfolio manager in BlackRock’s Renewable Power investment team, told Infrastructure Investor.
“The portfolio comprises approximately 60 percent wind assets and 40 percent solar assets and benefits from a combination of long-term, fixed-price PPAs and subsidies,” he said.
One of those assets includes another Norwegian wind farm – Tellenes – which BlackRock also acquired from Zephyr in June 2016.
Investors in GRP II include the New Mexico State Investment Council, the Orange County Employees Retirement System, Bord Na Mona General Employees Superannuation Scheme, Gebäudeversicherung, Kingfisher Pension Fund and Allgemeine Rentenanstalt Pensionskasse.
According to meeting documents of the Minnesota State Board of Investment, which committed $100 million to GRP II, the fund was generating a negative IRR of 6.87 percent as at 31 December 2017.
Asked about the negative return, Akerblom responded: “GRP II is in the midst of its five-year investment period, with many of its portfolio assets still under construction. Performance will mature as we are progressing the portfolio.”