Danish pension fund PKA has made its first direct onshore wind power investment with a stake in a 353MW project in Sweden, which will supply green energy to 220,000 households when completed in 2021.
PKA has partnered with Danish turbine manufacturer Vestas and Swedish energy company Vattenfall to install 84 turbines in two areas of northern Sweden – 50 across the Blakliden and 34 across the Fäbodberget wind parks.
Vestas will own a 40% share of the project equity, with PKA and Vattenfall each holding 30%. A mezzanine loan from PKA and Vattenfall will provide 25% of the funding. Total construction costs are estimated at €350m.
The bulk of the power generated by the turbines will be taken by Norsk Hydro on a long-term fixed price agreement.
PKA already boasts five offshore wind parks within its DKK275bn (€36.9bn) portfolio. However, the pension fund said the right type of investment and partnership had not previously been available to make an onshore investment possible.
Peter Damgaard Jensen, CEO of PKA, said: “The model created for this investment can be copied to other similar investments, as we have seen with our investments in offshore wind parks. With experienced and solid partners, a unique structure has now been created among major Nordic players in the field of energy, creating a large wind park that is profitable for all parties, without subsidies playing any significant role.”
This latest wind project will take the value of renewable investments in PKA’s total portfolio to DKK20bn. The fund aims to be invest 10% of its portfolio in renewables by 2020.
Damgaard Jensen continued: “We don’t expect this to be our last investment in onshore wind. We focus on this type of investment because we continue to find interesting opportunities in combining good returns to our members with mitigation of climate change.”
Vestas will supply and install the wind turbines, as well as carry out active output management services under a 25-year contract. Turbine delivery is expected to begin in the first half of 2021, with full commissioning planned for the fourth quarter.