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Onshore wind power attracts investors

February 22, 2024, 07:00
Large-scale onshore wind power is a cornerstone in OX2's operations and with 20 years of experience we have a leading position in Europe. Christoffer Brandorf, Head of Transactions at OX2, believes that it will continue to be an important and in-demand product, both for our customers and in the global energy mix.

In 2023, OX2 sold the onshore wind project Ånglarna in Falun municipality in Sweden. The sales process clearly showed that there is great interest from investors in onshore wind power.

– It was a combination of different factors that underpinned the interest. On the one hand, Ånglarna is in price zone SE3, where the need for more generation capacity is large and the electricity price is high, which makes it attractive to own production in that area. At 115 MW, it is also a relatively large project in a part of the country where few construction-ready projects come to market. Sweden is also generally seen as a low-risk country to invest in, says Christoffer Brandorf, Head of Transactions at OX2.

A variety of investors

The buyer was the Swiss energy company ewz, but the sale was preceded by interest from a variety of investors.

– Some want direct exposure to the energy market because they believe in continued high and growing demand for electricity amid the wider theme of energy transition. Or, as in the ewz case, the company has a mandate to drive its own transformation towards owning more renewables. Other investor archetypes, for example institutional capital, may choose to hedge their revenues to optimize for a competitive risk-adjusted and predictable return over a long period of time, says Christoffer Brandorf.

Relationships built over time

The Ånglarna project was OX2's first sale to ewz, but the relationship has been built over a long period of time. After almost nine years at OX2, Christoffer, together with the rest of the transaction team, has a large network of existing and potential customers.

– We know a lot of relevant buyers and we make sure to maintain our network. Obviously good relations and our good track record in the Nordics build trust and facilitate discussions. But in the end, investment decisions are underpinned by commercial grounds, and Ånglarna was a strong project that turned out to be a good deal for both parties.

Sales in Poland and Italy

During the year, OX2 also sold onshore wind power projects in Poland and, for the first time, in Italy.

– The process is similar regardless of market, where we, in one way or another, entertain a competitive process to secure the most competitive deal. At the same time, there are always elements that will differ market to market, for example fundamental legal interpretations, says Christoffer Brandorf.

The sale in Italy, a 27 MW onshore wind farm in Foggia, was a success.

– Here we really demonstrated our depth of capabilities. In a new market, we secured an attractive PPA (power purchase agreement) and created strong competitive tension in a rather volatile market. The project was sold under a forward sale structure, where we finance the construction of the project ourselves with closing of the share purchase agreement in conjunction with start of commercial operation.

Important role in the mix

At the end of 2023, OX2's project development portfolio contained onshore wind power in seven markets.

– There is high demand for onshore wind power, and I believe it will continue to be a strong product. The global build-out of renewable energy is mainly happening in solar right now. But solar projects only generate electricity during the day, which pushes prices down during those hours, and then produces nothing at all during the night. Wind has a different production pattern to solar power, which makes it a valuable resource, especially in markets that build a lot of solar. In many markets, wind is taking on a more important role in the energy mix, says Christoffer Brandorf.

Head of Transactions
Christoffer Brandorf