Tuesday, 20 June 2017

Denmark's COP to lead development of Newfoundland array by Richard A. Kessler, Recharge News 20 June 2017

Copenhagen Offshore Partners (COP) says it has won a contract to lead both early and late-stage development for what could become Canada’s first offshore wind project – a 180MW array in St. Georges Bay west of Newfoundland.
COP did not release terms of the deal awarded by Danish fund manager Copenhagen Investment Partners (CIP), which last September announced it would invest all capital required to build the facility in partnership with Beothuk Energy, based in the provincial capital of St. John’s.
COP says it will oversee development jointly with Beothuk until finalisation of a power purchase agreement, and then lead the project to financial close and through the construction phase in cooperation with the local company. It was not immediately clear when construction would begin.
Beothuk has talked with potential buyers for the electricity in several Canadian provinces and New England region in the US. It has not set a deadline for completing a power off-take arrangement.
St. George’s Bay could take advantage of Emera’s Maritime Link, a high-voltage subsea transmission project under construction that will connect Newfoundland for the first time with Nova Scotia, New Brunswick and the six-state ISO New England market. It will enable export of 500MW of renewable power.
Beothuk has eyed the US state of Massachusetts as a possible market, which now has a legal mandate to procure 1.6GW of offshore wind energy by 2027. Later this month, electric utilities there are expected to release an offshore wind request for proposals for as much as 800MW of initial capacity, with winners to be announced next year.
CIP, however, is expected to submit supply bids itself after acquiring a strategically located 1GW zone facing the Massachusetts coast last year. In May, it sold a 50% stake in the Vineyard Wind project to Avangrid Renewables.
Beothuk says St. George’s Bay will supply electricity to more than 150,000 households, create more than 500 jobs during the construction phase and establish a new industry in Atlantic Canada.
Beothuk, which has been developing the project since 2011, has held talks with Siemens for supply of unspecified turbines, but no firm contracts have been signed. It lists Siemens as a “strategic partner” on its website.

Canadian pension fund PSP to buy largest stake in Pattern Energy by Karl-Erik Stromsta , Recharge News, 19 June 2017

Canada’s Public Sector Pension Investment Board will acquire nearly 10% of the shares of Pattern Energy, becoming the wind-focused US yieldco’s largest shareholder, in a deal Pattern says underscores growing investor confidence in the renewables sector.
PSP Investments, among Canada’s largest pension investment managers, will acquire 8.7 million shares of Pattern Energy from its privately held sponsor company, worth $206m at their closing price of $23.69 on Friday.
PSP Investments will also co-invest $500m in projects being acquired by Pattern Energy, including stakes in the recently completed Meikle wind farm in British Columbia and the Mont Sainte-Marguerite project in Quebec due for completion later this year.
PSP is part of a growing body of Canadian investment funds and energy companies moving aggressively into renewables. San Francisco-based Pattern, whose shares are listed in both the US and Canada, is a sizeable player in the wind markets of both countries.
Pattern Energy was the 11 th largest owner of US wind capacity at the end of 2016, with 1.8GW, according to data compiled by the American Wind Energy Association. The yieldco owns 2.6GW of renewables capacity overall, and has targeted 5GW by 2020.
“This relationship grants us access to a portfolio of projects and a source of new assets in renewables, and we believe it will provide good and stable returns for our contributors and beneficiaries,” says Patrick Samson, PSP Investment’s managing director for infrastructure investments, noting that renewables are “the fastest growing market of power generation”.
Shares of Pattern Energy rose 3.4% in early trading Monday on the news, to $24.50, their highest point since mid-2015.
For much of the past two years, Pattern's shares have traded below their 2013 initial public offering price of $22, amid persistent investor concerns about renewables yieldcos in the wake of SunEdison's bankruptcy.
But the tides have been turning for yieldcos this year, with Pattern’s shares up more than 28% in 2017.
Pattern Energy invests in Pattern Development 2.0
PSP’s investment comes as part of a flurry of deals and reshuffling within the Pattern family of companies, which includes the publicly listed yieldco Pattern Energy and two privately held developers – Pattern Development 1.0 and Pattern Development 2.0, which are owned by US private-equity firm Riverstone Holdings.
Late last year a single development company – Pattern Development, known as Pattern Energy's "sponsor" – was split into two companies: Pattern Development 1.0 and Pattern Development 2.0.
Pattern Development 2.0 owns the bulk of the early- and mid-stage renewables projects in the development portfolio, while Pattern Development 1.0 has held the controlling stake in Pattern Energy and most of the late-stage projects expected to be sold – or “dropped down” – to the yieldco.
The thinking behind separating Pattern Development 2.0 into its own early-stage development company was that it would be easier to raise capital for new projects and expand the development pipeline.
Since the creation of the separate development companies, Pattern Energy has signaled the likelihood that it would invest directly in Pattern Development 2.0.
On Monday Pattern Energy confirmed it will make an “initial” $60m investment into Pattern Development 2.0 – giving it a 20% stake – with an option to invest up to $300m and acquire the entire company. In doing so, Pattern would tie together the early-stage development and project operations activities into a single publicly-listed company.
As a result of the transaction, PSP will indirectly become an owner of Pattern Development 2.0 through its stake in Pattern Energy.
Meanwhile, Pattern Development 1.0 will "gradually wind up its business", selling its remaining projects to Pattern Energy over time, the company says.
“Pattern Energy’s investment in the development business allows us to improve our margins and secure access to a tremendous pipeline of new projects,” says chief executive Mike Garland, chief executive of both Pattern Energy and the development companies.
Pattern Energy’s direct investment in Pattern Development 2.0 comes alongside a $724m package of long-term capital commitments announced for the developer from an entity managed by Riverstone, which includes money from pension, sovereign wealth, endowments, family office, and investment funds.
Pattern Development 2.0 says it has expanded its project pipeline to 10GW, encompassing wind, solar, transmission and storage projects in the US, Canada and Mexico.

Tuesday, 13 June 2017

Dong completes transformation with oil & gas disposal, by Andrew Lee, Recharge News, 24 May 2017

Global offshore wind pacesetter Dong Energy hailed its “transformation into a leading pure-play renewables company” after agreeing to sell its oil and gas business for up to $1.3bn.
The Danish group struck a deal with the UK’s Ineos that will see the latter take on Dong E&P when the transaction completes in the third quarter of 2017.
Dong first announced plans to divest its fossil-focused assets last year, and the deal will see it receive $1.05bn unconditionally and another $250m depending on developments at certain assets.
The sale will give Dong more firepower to fund its global offshore wind expansion plans, which have already seen it take the lead in the sector.
The company is on track to have 6.5GW in place off Europe by the end of the decade, and last year flagged an ambition to have stakes in 11-12GW of offshore capacity by 2025.
That will see the group move into new markets such as the US and Taiwan – it already has interests in projects in both nations.
Dong recently signalled a new phase for the offshore wind sector when it lodged ‘zero subsidy’ bids for future plants off Germany.
Dong CEO Henrik Poulsen said: “Since the decision in 2016 to divest our upstream oil and gas business, we’ve actively worked to get the best transaction by selling the business as a whole, getting a good and fair price for it and ensuring the optimal conditions for the long-term development of the oil and gas business. With the agreement with Ineos we’ve obtained just that.”
“The transaction completes the transformation of Dong Energy into a leading, pure play renewables company.”
Danish state-controlled Dong – in which investment giant Goldman Sachs also holds a stake – is the most notable example of a fossil-fuel-based operation pivoting towards clean energy.
Norway’s Statoil and Anglo-Dutch group Shell have also entered the offshore wind sector – although not to anything like the same extent as Dong – while France’s Total is a serious player in the solar industry.

Monday, 12 June 2017

Oil giant Shell calls for 10GW offshore megaprojects by Anamaria Deduleasa, Recharge News, 07 June 2017

Megaprojects in the 10GW range built around “anchor tenant” led development consortia will be needed to make offshore wind a global mainstream energy source, according to Shell New Energies executive vice-president, Mark Gainsborough.
The oil supermajor believes this model — adopted from the retail sector where a prestige brand store is given lower rent to attract other tenants — will be a better means of accelerating and upscaling the build-out of offshore wind farms than the current tender model being employed in certain European countries, which are driven by 2030 national targets.
“Shell believes that instead of organising the next tranche of leases and tenders simply on the basis of meeting national targets in 2030, we would propose that the next phase be thought of as a stepping stone, a de-risking exercise, towards a much bigger offshore wind industry that operates at the scale of the potential resource,” Gainsborough told OWE 2017.
“We believe that a few large, integrated projects up to 10GW, with an anchor tenant who takes the biggest risk for about half the project, need to be developed to ensure we all learn how best to do this.
“Think of the cost savings that could be achieved by constructing several hundred wind turbines continuously, like an offshore assembly line.”
According to Gainsborough, upscaling development would lower cost, create value across the supply chain, and stimulate economic growth.
Shell, which has plans to earmark around $1bn a year for investment in renewable energy sources from 2020, is in the early stages of diversifying its portfolio. In the US, the group is a 50-50 joint venture partner in six operating onshore wind projects, and in Europe, in the Netherlands, together with Mitsubishi, Eneco and Van Oord, it won the 700MW Borssele 3&4 offshore tender in last year.
“A cleaner energy future is both desirable and possible... but this will require action in all sectors of the energy system, and will require scaling up opportunities. Long-term integrated policies on climate, energy and economy will be necessary, along with a power market that sends the right investment signals,” he says.

Statoil to use oil and gas expertise to grow in offshore wind by Anamaria Deduleasa, Recharge News, 09 June 2017

Norway’s Statoil is aiming to play on its oil and gas strengths and expertise to grow its renewable energy business, said executive vice president of new energy solutions, Irene Rummelhoff.
Statoil has already made renewables part of its core activity, after realising that “business as usual was not an option”, said Rummelhoff at Offshore Wind Energy in London this week.
She added that, as the company had a lot of experience in offshore installations, operations, modifications, derived from having worked in the oil and gas industry, the change in direction was an “opportunity”.
“All skills were relevant for the offshore wind industry,” said Rummelhoff. “This was an opportunity rather than a threat for an oil and gas company, because we have an industry with immense growth potential in front of us, where we can play on the competences we have already developed. It’s not often these opportunities comes along.”
“Combining offshore wind and gas is a great opportunity that oil and gas companies can work with, in combination with other technologies, like batteries, and potentially also solar,” she said. “This will be a holistic solution going forward that will play to the strengths of like Statoil and Shell and other companies coming from the oil and gas sector.”
As it moved into the clean energy sector, Statoil acquired a 35% in the Dudgeon wind farm off eastern England, and won an auction for commercial development rights off New York.
The company said it now sees renewables as a “fully integrated part of its strategy”, with “new energy” set to account for around 20% of its capital investments by 2030.
In addition, Statoil’s budget for research projects is on an annual base around £250m. By 2020, 25% of it will be invested in low carbon solutions, says Rummelhoff.

Friday, 2 June 2017

Canada's renewable powerhouses are on the march, by Karl-Erik Stromsta, Recharge News, 19 May 2017

IN DEPTH | With a relatively small wind sector north of the border, Canadian renewables companies are increasingly moving into the US market, where they have been enjoying considerable success.

The US renewables market has long been a stomping ground for European heavyweight developers like Spain’s Iberdrola, Portugal’s EDP and Germany’s E.ON which have amassed multi-gigawatt American wind empires. Lately, however, a new breed of foreign developer has been making a big impact on the US market — and this time they’re coming from the north.
Over the past decade, Canada has quietly reared a formidable crop of homegrown renewables champions, fortified by the country’s stable hydro and vibrant wind markets. In many cases, Canadian renewables developers are in stronger financial shape than their American counterparts, and many are acquiring a taste for the massive — if quirky — electricity market south of the border.
Canadian renewables companies are buying US developers, US projects and even entire portfolios. Some are eyeing the nascent US offshore wind market. They are bringing their well-greased relationships with Canada’s big investment houses with them. And there’s every sign they’re just getting started.
The growing aggressiveness of Canada’s renewables sector was highlighted in March when Brookfield Renewable Partners, a Toronto-based hydro operator, outmanoeuvred rival suitors to take control of the TerraForm Power and TerraForm Global yieldcos from their bankrupt US parent SunEdison — catapulting Brookfield into a position of prominence on the global renewables stage.
Another good example is Algonquin Power & Utilities, a renewables developer and regulated utility company based near Toronto. Founded in the late 1990s with a focus on Canadian hydro, Algonquin diversified into Canadian wind development last decade before acquiring a portfolio of US projects from Spain’s Gamesa.
In 2016, Algonquin finished building two large US wind farms — the 200MW Odell in Wisconsin and the 150MW Deerfield in Michigan’s windy “thumb” — and at the end of the year it spent $75m on turbines that will allow it to build as much as 700MW more US capacity over the next few years, all of it eligible for the full production tax credit (PTC).
Canada was an ideal place for Algonquin to grow up, but “we’ve outgrown the market”, explains Jeff Norman, vice-president for business development at Algonquin Power, the company’s competitive generation arm. “We want to continue to grow, and we need to be in the US market to maintain those aspirations.
“We’re still very happy to participate in the Canadian market and view it as valuable. It’s just not our prime market any more.”
Algonquin’s southward march is being mirrored across Canada’s increasingly dynamic and globalised renewables sector. It’s being seen among independent power producers like Calgary’s Capital Power, which is building the 178MW Bloom wind farm in Kansas. It’s happening among Canadian private-equity firms such as Fengate, which last year made its first-ever investment in the US, buying a stake in the 120MW San Juan Mesa wind farm in New Mexico.
Importantly, it’s also happening among Canada’s massive pension funds, which bring the kind of financial heft that can move the needle even in a market as big as the US.
Caisse de Dépôt et Placement du Québec made an early move in 2014, buying a minority stake in Chicago-based Invenergy, North America’s largest privately owned renewables developer. So far this year, Alberta Investment Management acquired a 50% stake in Utah-based developer sPower, while Ontario Teachers’ Pension Plan agreed to back US transmission developer Anbaric, which has a number of huge renewables-related projects under way.
There’s always been a substantial investment flow between Canada and the US, including in the energy markets. But executives agree the trend in renewables has been especially pronounced over the past few years. A number of factors appear to be driving it.
Ontario Teachers' backs US transmission developer Anbaric
To start with, the Canadian wind market is slowing down, and the landing may be rough. Canada now has the world’s seventh-largest installed wind base, nipping the heels of the UK.
But the outlook for short-term development in Ontario and Quebec, the main Canadian wind markets of the recent past, looks grim. Analyst MAKE Consulting believes Canada’s wind installation rate could drop by nearly half over the coming decade compared to the past ten years.
The brightest spots for the Canadian wind market right now are the western provinces of Alberta and Saskatchewan, both of which have recently initiated processes to procure substantial amounts of new renewables capacity by 2030. But industry sources say those markets will not be enough to absorb the ambitions and financial firepower of Canada’s renewables independent power producers (IPPs).
One Canadian renewables executive points out that there’s now more wind capacity spinning in Texas than there is total generation capacity in Alberta.
Even deals in the secondary market for existing projects in eastern Canada may become scarcer in the coming years.
In February, Fengate closed on an acquisition of three utility-scale solar plants totaling 60MW from Canadian Solar in Sault Ste Marie, Ontario, and it would like to buy more wind and solar assets in the province, says Fengate director Andrew Cogan. But much of the fruits of Ontario’s recent renewables boom has been thoroughly picked over.
“A lot of those assets are now in their second or third hands, and by the time they get there, they tend not to change hands too often,” Cogan tells Recharge. “We’ll keep an eye out. But the growth is going to come, I think, from pushing south.”
The US market is “much larger, it’s very sophisticated and it’s really liquid”, he adds. “We’ve got three or four other projects on the go in the States right now, with another six or seven on the near-term horizon.”
At the same time as opportunities are growing scarcer in eastern Canada, Canadian developers are finally — and grudgingly — getting comfortable with some of the complexities of the US market, particularly the PTC and the attendant need for tax equity.
“For years many large Canadian IPPs stayed away from the US,” says John Carson, chief executive of Alterra Power, the British Columbia-based renewables developer that recently handed Vestas the turbine order for its second US wind project, the 200MW Flat Top in Texas.
“It was mostly because of the tax-equity aspect of it, but also because there were a lot of good Canadian deals they could spend their time on,” Carson tells Recharge. “As those deals have dried up, some of them have begun to look south.” And in the meantime, “they’re finally realising tax equity is not the demon they once thought it was”.
Like a number of Canadian developers, Alterra took steps in late 2016 to qualify future wind capacity for the full PTC — in its case as much as 1.7GW — and the company has plans to open a US office.
Canada’s fossil-fuel giants — which have generally embraced renewables more quickly than their US counterparts — are also pressing into the US renewables market. TransCanada, the company behind the controversial Keystone XL oil trunkline, owns a 132MW wind farm in Maine, and pipelines giant Enbridge has become a substantial wind player in the US — including its recent purchase of the 249MW Chapman project in Texas, due for completion this year.
"Developers like Northland are taking what they’ve learned in Canada and bringing it to bear in markets that are at a higher-growth point in their cycle right"
Mike Crawley, Northland Power
The trend of Canadian companies pushing into the US renewables market is universally expected to continue. Indeed, some Canadian developers with lingering reservations about the PTC may actually accelerate their push into the US as the tax credit phases down over the next few years.
Innergex, the Montreal-based renewables IPP, expects to become more competitive in the US market as the PTC winds down, and recently revealed it is considering buying a developer south of the border.
“I’d be happier without the PTC, and I think a Canadian company can do better without the PTC,” says chief executive Michel Letellier. Without the tax credit in place, Innergex will have “a better angle to attack the US market”, he says. Larger, better established US companies have a clear advantage over their Canadian competitors in attracting low-cost tax equity deals.
The US will no doubt remain the largest foreign target for Canada’s renewables sector, but Canadian players are increasingly flexing their muscles even further afield.
Last year, UK-based Cubico Sustainable Investments, which owns a 2GW portfolio of renewables assets across Latin America and Europe, was acquired by two Canadian pension managers — the Public Sector Pension Investment Board and Ontario Teachers’ Pension Plan.
Montreal-based Boralex, meanwhile, has become the largest independent wind developer in France, and Northland Power, the Toronto-based IPP, has made a major splash in the European offshore wind market, most recently by buying the 252MW Deutsche Bucht project in the German North Sea.
The era of the Canadian renewables powerhouse, it seems, has arrived.
“Developers like Northland are taking what they’ve learned in Canada — the skills, the relationships they’ve built — and bringing them to bear in markets that are at a higher-growth point in their cycle right now,”, Northland’s executive vice-president for business development, Mike Crawley, tells Recharge.
Beyond its plans to build more offshore wind farms in Europe, Northland is developing projects in Taiwan and looking to enter the emerging offshore market in the US Northeast.
“There are still growth opportunities in Canada,” Crawley notes. “But there are significant growth opportunities elsewhere.”