By Anca Gagiuc
Enel Green Power North America, an Enel subsidiary, started work on the 450-megawatt High Lonesome wind farm in Texas’ Upton and Crockett counties. The project, expected to begin commercial operation by the end of 2019, will be the largest wind farm in Enel’s global renewables portfolio.
Costs associated with the construction of High Lonesome amount to about $600 million and are included in the company’s 2019-2021 strategic plan. Currently, the wind project is financed through the Group’s own resources. Upon completion, the wind farm is anticipated to generate around 1.7TWh annually, while avoiding the emission of more than 1.1 million tons of carbon dioxide per year.
Green and secure
Enel has entered into a long-term Proxy Revenue Swap for a 295-megawatt portion of the project with insurer Allianz Global Corporate & Specialty, Alternative Risk Transfer and provider of weather and climate risk management products Nephila Climate. The PRS is a financial derivative agreement designed to produce stable revenues for the project regardless of power price fluctuations and weather-driven intermittency, hedging shape risk in addition to risk associated to price and volume. Under this agreement, High Lonesome will receive fixed payments based on the expected value of future energy production. The PRS was executed in collaboration with REsurety and is the first agreement of its kind for Enel. Furthermore, it holds the top rank globally as the largest deal by capacity for a single plant to be signed.
“The construction of High Lonesome is a strong testament to the popularity and success of innovative renewable energy protections,” Karsten Berlage, managing director, Allianz Risk Transfer, said in prepared remarks. “The majority of today’s stakeholders champion the continued growth of renewables and that is why Allianz is committed to flexible strategies such as the PRS that mitigate those risks–long term.”
Lee Taylor, co-founder & CEO of REsurety, added: “Renewable energy projects are under increasing pressure to deliver predictable returns despite the increasing volatility of the value of intermittent generation. We developed the Proxy Revenue Swap specifically to deliver unrivaled certainty of cash flows, regardless of power price volatility and weather-driven intermittency. We are delighted to have had the opportunity to collaborate with Enel, Allianz and Nephila to bring the largest PRS transaction to fruition.”