The agreed transaction, with a value of approximately US$900 million, features an equity and tax investment structure, involving the utility and JP Morgan and Morgan Stanley, respectively.
Gamesa is developing and building 4 separate wind farms, which will be equipped with 240 of Gamesa’s G9X-2.0 MW wind turbines, and are scheduled for commissioning in 2012. The deal represents new firm orders of 350 MW for delivery in 2012.
Furthermore, Gamesa and Algonquin Power & Utilities Corp have entered into a collaboration agreement to pursue additional wind power development opportunities in the US and Canada.
The agreement aligns with Gamesa’s strategy of realising the value from its global wind farm portfolio (23,891 MW). In the US alone, Gamesa has over 3,500 MW of wind assets at various stages of development.
Gamesa has signed a deal to sell four wind farms in the United States, with combined capacity of 480 MW, to Canada’s Algonquin Power & Utilities Corp. (Algonquin) for approximately US$900 million (700 million euro).
These wind farm projects will be outfitted with 240 of Gamesa’s G9X-2.0 MW turbines and are sited in high wind resource areas: Pocahontas Prairie (80 MW) in Iowa; Sandy Ridge (50 MW) in Pennsylvania; Senate (150 MW) in Texas; and Minonk (200 MW) in Illinois.
Gamesa is developing and constructing the projects, which will be commissioned during 2012: 80 MW have been fully commissioned, while the remainder are under various stages of construction.
The deal represents new firm orders of 350 MW for delivery in 2012. In addition, Gamesa will provide O&M and asset management services during 20 years for each of the wind farms comprising the portfolio.
The transaction in its entirety generates a contribution to the group EBIT of approximately US$35 million (26.5 million euro), excluding the operation and maintenance (O&M) contract result.
"This transaction combines three of Gamesa’s major goals: partnering up with new leading customers in the North American renewable energy sector; attracting investments from tier one financial institutions who value and underwrite in our technology and in the wind power market; and further achieving our economic goal of maximising the value of our wind farm portfolio, in this case in the US," said Gamesa Chairman and CEO, Jorge Calvet.
Ian Robertson, Chief Executive Officer of Algonquin Power commented: "We are very pleased to be working with Gamesa and plan to leverage and maximize the strengths of both companies in the North American wind energy business. We believe that our Development Agreement with Gamesa will provide opportunities for Algonquin to further invest in profitable wind power generation assets and maximize returns to shareholders."
A new leading customer for Gamesa technology
The transaction features the following equity and tax investment structure involving the Canadian power company, and JP Morgan and Morgan Stanley as tax equity financial investors:
Algonquin acquires – via a limited investment company – a controlling position in the four wind farms under a ‘cash equity’ structure;
JP Morgan and Morgan Stanley will be making a significant tax equity investment in the transaction.
Gamesa temporarily retains a minority position in such investment company and is currently under negotiations with other potential buyers.
John M Eber, Managing Director at JP Morgan Capital Corporation, in addressing his Tax Equity contribution, said: "We are pleased to be working again with Gamesa in a sizeable transaction. The projects and the technology fit our investment approach of strategic and selective capital deployment."
"This sale illustrates the creativity of Gamesa’s team in being able to build wind farms that are attractive to investors even in the absence of attractive PPA’s," explained Gamesa North America Chairman, David Flitterman.
Cooperation agreement between Algonquin and Gamesa
Concurrently with the development of this innovative market transaction, Gamesa and Algonquin have entered into a joint Development Agreement to pursue additional wind power development opportunities in the United States and Canada.
Under the agreement, Algonquin will be provided visibility into Gamesa’s pipeline of 3,500 MW of near and medium term wind power development opportunities in the United States. Gamesa will have the opportunity to work with Algonquin to advance and expand Algonquin’s 325 MW pipeline of contracted development projects.
Algonquin Power & Utilities is a growing renewable energy and regulated utility company with over US$1.2 billion in assets across North America. The Corporation actively invests in hydroelectric, wind power and solar power facilities and sustainable regulated utility distribution businesses (water, electricity and natural gas).
Wind farm development and sale division, a key area for Gamesa
The Wind farm development division is a key business for Gamesa, as it provides the company with competitive advantages and complements its wind turbine manufacturing activity.
As of December 31st 2011, the company had a wind farm pipeline of 23,891 MW worldwide. In the US, Gamesa has 3,500 MW of wind project development pipeline, in various stages of development and completion.
In 2011, Gamesa continued to focus on wind farm development and sales, closing sales agreements totalling 417 MW with some of the world’s leading utilities and the delivery of 177 MW in several European countries and the US. Moreover, the company has 734 MW in the final phases of construction and commissioning.
North America, a strategic market
Gamesa’s manufacturing presence in the US dates back to 2005. Today Gamesa has two factories in Pennsylvania and one offshore technology centre in Virginia. In total it employs 900 people in North America. It is also very active in the wind farm development and sales segment.
The North American market currently represents 14% of Gamesa’s total global wind turbine sales volumes (MW).
Gamesa was the recipient of the U.S. Export-Import Bank’s ‘Renewable Energy Exporter of the Year’ award in 2011 for successfully exporting 102 MW of Gamesa’s wind turbines for the Cerro de Hula wind farm project in Honduras which was Ex-Im Bank’s first renewable-energy deal utilizing the Bank’s new carbon-policy incentive.