Via Kristy Dorsey
With the purchase of a 50 percent stake in a massive Swedish wind farm, Edinburgh-based Red Rock Power has made its first foray into Europe.
The company, a wholly owned subsidiary of SDIC Power Holdings of China, has acquired its stake in the onshore Overturingen wind farm from Green Investment Group for an undisclosed sum, which was identified as “market price.” by Managing Director Guy Madgwick. The company is now a partner in the 56-turbine joint venture with Nordic infrastructure manager CapMan Infra.
The acquisition is described as a “major milestone” for Red Rock, acquired in 2015 by SDIC from Repsol, a Spanish company. Two years ago, Mr. Madgwick entered the organization with a goal to reshape it as an investment vehicle for Europe-wide renewable energy ventures.
The deal for the 240.8 MW Overturingen wind farm took a year to close from the original agreement and was partly delayed by the coronavirus pandemic. Red Rock, which has a stake in a number of U.K. Wind ventures are now looking to expand their growth into other markets in Europe.
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Madgwick said, “The task is Europe – it’s not just about Scotland,” This year, it was important to close a European deal, even though it was difficult.
We will be participating in a variety of renewable energy ventures, even though we are listed as a wind power company. This year, we also looked at solar power, but were unable to execute that project. The storage of batteries makes perfect sense, and I would argue that the hydrogen economy still makes sense, although the market is probably a few years further along commercially.
Overturingen, which is located in central Sweden, started commercial operations earlier this month and will produce about 805.5 GW-hours per year.
For the next 29 years, Norwegian aluminum corporation Norsk Hydro has agreed to buy much of the capacity of the wind farm. It is thought to be one of the industry’s longest power purchase agreements (PPAs) ever seen. For the remainder to supply about 25,000 homes, a second client, NEAS Energy, has agreed to a 10-year PPA.
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According to Madgwick, Sweden is an enticing market as a nation where it is possible to develop “at scale,”
“Sweden’s commitment to renewable energy and its wealth of natural resources meant it was an obvious key target for us as we contemplated our expansion into other European markets,” he said.
We are pleased to be working with CapMan Infra to add our rising portfolio to the Overturingen wind farm. As we continue to find acquisition and growth opportunities in the area, we expect to gain a deeper understanding of the local industry.
His interest included a 25 percent stake in the Beatrice offshore wind farm and a speculative 50 percent stake in the then plans for a 700 MW offshore wind farm at Inch Cape in eastern Scotland when SDIC acquired the company in 2015. The latter has recently been approved to increase capacity up to 1 GW and is currently being built with the Irish energy company ESB.
Almost all the electricity in Scotland is created from renewable sources.
In October 2018, to complete its current portfolio, Red Rock acquired the 50MW Afton wind farm near New Cumnock in Ayrshire. Since February 2018, Afton has been operational.
SDIC Power, based in Beijing, has a total installed capacity of over 34 GW, more than half of which comes from renewable energy reserves. The company is listed on the Shanghai Stock Exchange and earlier this year achieved a London listing by issuing worldwide depositary receipts (GDRs).
Mr. Madgwick said there is a “wall of money” waiting to be placed into renewable energy, pushing investors to accept lower returns. He said it is “essential” for Red Rock to close more deals in the coming year, considering those difficulties.
“I think as we come out of the pandemic, there will be a lot of activity in this area,” he added.