French private equity firm Omnes Capital has bought a stake in a 200MW wind farm in Finland in what it plans to be the start of a 1GW platform.
The group has formed a joint venture with Finnish wind developer llmatar Windpower, in which Omnes holds 70 percent, beginning with the unsubsidised 200MW Piiparinmäki-Murtomäki project, acquired from Metsähallitus, a state-owned entity responsible for managing one-third of Finland’s surface area.
The platform is expected to comprise between five and 10 subsidy-free projects once completed, Kalle Pykälä, chairman of Ilmatar, told Infrastructure Investor, with the sites largely to be based in Finland but with room for growth in neighbouring countries too.
“The future projects will be a lot driven by how the fundamentals will be,” he added. “Nobody knows what the price of electricity will be, but it’s at historically low levels and yet we still are able to complete this now. We clearly believe there is a strong Finnish and Nordic opportunity that can be done and Finland is importing about 20 percent of its electricity, which is not a sustainable situation.”
The move is Omnes’s first renewables investment in the Nordics and an opportunity which the company had been monitoring for a while.
“Finland was a country we were focusing on for about two years,” explained Serge Savasta, head of renewable energy at Omnes. “We wanted to be present because we knew the fundamentals were good to enter and to stay for years. We needed to identify a partner with a strong track record.”
All of the projects developed by the Ilmatar Energy platform will be unsubsidised following the closure of Finland’s wind feed-in-tariff scheme last November. Pykälä said this will mean some sites will be built on a project finance basis while others will involve pure equity. He added that the structure allows for other equity partners to invest in projects alongside the duo.
“We have seen a flow of new types of investors into the neighbouring markets in Sweden and Norway and I would see a similar trend surfacing to Finland as well, where we see some of the leading infrastructure and financial investors entering this market,” said Pykälä.
Omnes said the change of investor type in the market became an opportunity for the group ahead of traditional developers.
“We know the financing structure of building unsubsidised wind is going to be different and we think our task over the next several months is going to be to educate some of these investors and some of the banks,” said Michael Pollan, investment manager at Omnes. “We are lucky in that the Swedish market has been a precursor and has done some of that educational process. The work going to be done here is finding the financing and signing PPAs and that’s a segment of the market where more conservative investors prefer to come in once the project is up and running.”
Omnes’s investment came through its €245 million Capenergie 3 fund which is now 60 percent invested. It has also directed funds towards projects in Italy, France, Portugal and the UK.