Nordic renewables platform one of last deals from Ardian Fund IV

Similar in strategy to US platform Sky Renewables, the €300m investment aims to build a portfolio focused on wind, solar, hydro and biomass.

Paris-based Ardian has set its sights on the Nordics, aiming to build a sustainable-energy platform in the region that will invest primarily in wind, solar, hydro and biomass.

To that end, it has partnered with Swedish renewable energy developer OX2, agreeing to invest €300 million for the construction of a 250MW wind farm in Åndberg/Härjedalen, which will be operational in 2021. OX2 will lead the construction and technical management of the facility, the two parties said in a joint statement.

The investment will be “one of the last ones in Fund IV,” Amir Sharifi, managing director at Ardian Infrastructure, told Infrastructure Investor, referring to the Europe-focused vehicle which closed on €2.65 billion in January 2016. The latter was generating a net IRR of 15.5 percent as at June 30, 2018, according to documents of the San Joaquin County Employees’ Retirement Association in California.

Ardian is currently in the process of raising its fifth European fund, which has a target of €5.5 billion according to the same documents, and a target net IRR of between 10 and 13 percent.

The Nordics initiative is similar to what Ardian is doing in the US, where it partnered with Transatlantic Power Holdings last March to launch Skyline Renewables. That platform aims to build a 3GW of renewable energy. Ardian declined to specify a target for the Nordic renewables platform, other than to say “it will be sizeable”.

According to the statement, the new platform will also include a 51.8MW wind farm in Norway and a 76MW wind farm in Sweden, in which Ardian invested in 2016. Both projects became operational last year.

Asked what led the firm to focus on the Nordic region, Sharifi cited several reasons, including that “it is a subsidy-free market thanks to a low levelized cost of electricity, which is enabled by exceptional wind conditions and technology improvements”.

He added: “The region has a lot of hydropower which acts as a giant battery and reduces risk of wind self-cannibalisation [and] it is the world’s largest market creating solutions for offtake.”

According to a recent study by Grant Thornton, the region “is at the frontier of renewable energy generation, having built up a reputation over recent years for harbouring very favourable project development market conditions”.

Approximately 75 percent of the region’s total energy supply is generated from renewable sources, the accounting firm said. That percentage is expected to reach 80 percent by 2040.

Ardian’s Nordics platform – whose name has yet to be announced – will be led by Eero Auranne and Thomas Linnard. Auranne has 30 years of experience in the energy sector having worked for numerous energy companies in the region including as chief executive of Finland’s Empower Group. Linnard joins from Swedish renewable energy developer Rabbalshede Kraft where he served as chief executive.