March 16, 2017
Capital Power’s Bloom Wind is recognized for its use of the first Proxy Revenue Swap hedging structure to secure long term revenues.
EDMONTON, AB–(Marketwired – March 16, 2017) – Capital Power’s Bloom Wind project was recognized by infrastructure journal and project finance magazine, IJGlobal, as the North American Wind Deal of the Year. The annual IJGlobal Awards, which recognize and celebrate the best in energy and infrastructure deals over the past year, were handed out in New York on March 15, 2017.
Capital Power’s Bloom Wind project earned the award recognition for the use of an innovative 10-year Proxy Revenue Swap agreement with Allianz Risk Transfer (ART), a subsidiary of Allianz SE, the worldwide insurance and asset management group, covering 100 per cent of the project’s output. The unique product was created and commercialized through a partnership amongst ART, Nephila Capital Ltd., REsurety Inc. and Altenex LLC, which swaps the floating revenues of the wind farm — those driven by the hourly wind resource and power prices — for a fixed annual payment.
“We’re proud to pioneer the use of this innovative risk-management solution for hedging potentially volatile revenues of wind farms at Bloom Wind,” said Paul Wendelgass, Capital Power Director, Business Development. “The agreement secures long-term predictable revenues for investors, which provided an opportunity for Capital Power to secure a renewable energy tax-equity investment for Bloom Wind with Goldman Sachs Alternative Energy Group in December 2016.”
The first-of-its-kind product was developed by ART to help project owners manage the revenue volatility associated with the wind resource variability related to large-scale wind projects. Capital Power is among the first Independent Power Producers in North America to utilize a proxy revenue swap agreement as a risk-management solution for hedging revenue volatility of wind farms. The product is an alternative to securing a traditional contracted off-taker through a Power Purchase Agreement and has potential to be replicated for other renewable projects in the U.S. and globally.
“This pioneering solution enables both investors and corporations alike to launch sizable renewable energy projects, and is a key growth area for Allianz,” said Karsten Berlage, Managing Director at Allianz Risk Transfer. “By circumventing high up-front costs associated with clean energy, these projects will be brought online at a much faster pace and we are very proud to partner with Capital Power and to support Microsoft’s largest wind energy purchase to date.”
In November 2016, Microsoft Corp. became the first buyer to participate in this structure, acquiring the environmental attributes connected to Bloom Wind from ART for a 10-year period. The combined output from Bloom and a Wyoming wind farm will produce enough energy on an annual basis to cover the annual energy used at Microsoft’s Cheyenne, Wyoming, datacenter.
“Microsoft is constantly looking for new ways to accelerate the adoption of clean energy,” said Christian Belady, general manager of cloud infrastructure strategy and architecture at Microsoft. “We worked closely with ART and Capital Power to come up with the innovative finance model. This approach has the potential to bring more clean energy online, faster, and we’re proud that our participation helped make this project a reality.”
The 178 megawatt Bloom Wind project, located in Kansas is situated within one of the strongest wind regimes in the U.S. Construction of the project began in August 2016 and is expected to be completed on time and on budget in the third quarter of 2017.
About Capital Power
Capital Power (TSX: CPX) is a growth-oriented North American power producer headquartered in Edmonton, Alberta. The company develops, acquires, operates and optimizes power generation from a variety of energy sources. Capital Power owns more than 3,200 megawatts of power generation capacity at 18 facilities across North America. More than 700 megawatts of owned generation capacity are in advanced development in Alberta and under construction in Kansas.
About Allianz Risk Transfer
Allianz Risk Transfer (ART) is the center of competence for alternative risk transfer business within the Allianz Group offering tailor-made insurance, reinsurance and other non-traditional risk management solutions to industrial and financial clients worldwide. Founded in June 1997, the company is a wholly-owned subsidiary of Allianz Global Corporate & Specialty SE. ART operates through affiliated companies with offices in Amsterdam, Bermuda, Dubai, Liechtenstein, London, New York and Zurich. Its client base spans across all industry sectors and its solutions are most effective for clients facing unusual or complex risks, where traditional (re)insurance or financial products are inadequate. As of today, ART AG is rated AA- by Standard & Poor’s and A+ by A.M. Best. www.art.allianz.com