German pension closes on 281MW wind farm

The Nordlicht wind farm in Norway was guaranteed by the country’s export credit agency in a move seen as ‘crucial’ to ensure the project’s financial close.

Ärzteversorgung Westfalen-Lippe (AVWL), one of Germany’s largest occupational pension funds, has closed financing on a 281.4MW onshore wind farm in Norway.

Investing alongside fellow shareholder Siemens Financial Services, the pension fund for German doctors bought the Nordlicht project from developer Norsk Miljokraft, after it appointed German investment bank Berenberg in 2015 to find backers for the wind farm.

AVWL’s investment came through asset manager Prime Capital, which said the Nordlicht site is the largest onshore renewable energy project in Europe this year that has reached financial close. Debt financing was provided by DekaBank and KfW.

Nordlicht is backed by a long-term power purchase agreement with aluminium supplier Alcoa. The offtake agreement is guaranteed by Norwegian export credit guarantee agency GIEK with a rating of AAA, a move described as “crucial” for the project.

“GIEK’s power guarantee scheme has enabled us to enter into a long-term power contract with the highest level of safety,” said Kai Rune Heggland, Alcoa Norway’s chief executive. “The predictability provided by GIEK is crucial for realising projects such as the Nordlicht project, and helps us to gain access to renewable power in Norway approaching globally competitive prices.”

The total guarantee by GIEK amounts to €55 million and is seen as a model for future Norwegian investments, particularly with Nordlicht’s financial close partially delayed by low power prices.

“Investors and banks that finance wind power want a high degree of predictability,” said Karl Magnus Maribu, adviser to DNB Markets, which assisted Prime Capital. “GIEK power guarantees can help create a more efficient market for long-term power contracts because more power buyers and sellers may be eligible as counterparties in power contracts.”

Nordlicht is expected operational in mid-2019.

The deal is AVWL’s first equity investment in onshore wind, although it holds a minority stake in the 288MW Baltic 2 offshore wind farm and last year supplied a financing package for a 17.7MW solar project in the UK. The pension fund also last year was part of the €507 million refinancing of Spain’s Autopista del Sol toll road by Ferrovial. It has about €13 billion of assets under management.