Greensolver, an independent wind and solar-farm asset manager, and Newgreen, an industrial risk finance provider, have launched GreenBoost, an innovative new service for wind energy investors. GreenBoost is the first product to protect wind farm owners against unstable returns by offering guarantees on both wind and turbine availability.
For infrastructure investors, wind energy projects are an attractive prospect, with proven technology, low and predictable costs, and long-term Power Purchase Agreements (PPAs) supported by robust government incentive frameworks.
However, the financial risk involved in any wind energy investment is also evident. Wind is a highly volatile resource, with a direct and definitive impact on revenues. From one year to another, variation of wind can be as high as 30% and investors in many established markets have recently suffered the impact of low wind conditions.
Likewise, the reliable performance of a wind farm is highly dependent on the availability of wind turbines – complex electro-mechanical machinery requiring ongoing maintenance and constant monitoring. As the asset base expands and matures across Europe and the U.S., managing the availability of turbines is a growing task.
Combined, these challenges threaten the stability of long-term returns and can cause revenues to fluctuate significantly from business plan estimates.
GreenBoost has been designed specifically to mitigate this financial impact. The service guarantees wind and availability for a project for a period of 10 years. Should the wind resource fall below pre-agreed thresholds (close to the P50 expected level) at any time during that period, a payment will be due to the customer, with funds provided by an A-rated carrier partner. Equally, if the wind resource exceeds defined thresholds, compensation will be paid by the customer.
In the eventuality of below-par turbine availability, GreenBoost will pay the customer compensation equivalent to the shortfall. However, should availability exceed expectations, the customer will keep 100% of the upside.
Ultimately, GreenBoost provides project owners with the ability to determine the exact annual revenue of a given wind farm during the contract period, assisting greatly with long-term business planning. Reducing financial risk in this manner not only guarantees smooth returns, but also increases those returns by enhancing the financing terms of a project.
Furthermore, the GreenBoost contract is delivered hand-in-hand with Greensolver’s traditional asset management and performance optimization services, helping to guarantee that performance targets are consistently met throughout the project lifetime.
“From an investor’s perspective, volatile and uncertain cash flows are far from ideal – particularly when wind projects form part of a low risk asset portfolio, where steady returns are critical” said Guy Auger, CEO, Greensolver.
“That’s why, faced with changing weather patterns and the challenge of maintaining complex equipment – and with a changing appetite for risk amongst investors – industry demand is growing for ways to safeguard and guarantee profitability in the long-term.”
Benoît Amouroux, Managing Partner, Newgreen, added: “GreenBoost is unique in combining wind and availability guarantees, with an efficient risk sharing approach. This integrated product adds quality and value to secure long-term production, performance and returns.”
GreenBoost is yet another innovative product that Greensolver has unveiled for the wind energy market in the past year, following the launch of the Greensolver Index, a unique benchmarking service that allows project operators to compare project and portfolio performance and the efficiency of both O&M procedure and grid connections. Greensolver Index currently boasts a database of over 1.7GW of wind assets across Europe.
To learn more about how GreenBoost guarantees returns for wind energy investors, please click here.
Filed Under: Uncategorized