Enel, through its US subsidiary for renewables Enel Green Power North America, Inc. (“EGPNA”), has begun construction of the High Lonesome wind farm with a capacity of approximately 450 MW, located in Upton and Crockett counties, in Texas. Once completed, High Lonesome will be the largest wind farm in Enel's global renewables portfolio. The energy generated by a portion of the plant with a capacity of 295 MW will be supported by a Proxy Revenue Swap (PRS), a contract that aims to manage and minimize risks related to meteorological and price factors.
“The start of construction on our largest wind farm demonstrates our strong commitment to business growth in the United States and especially Texas,” he commented. Antonio Cammisecra, head of Enel Green Power. “This project highlights our ability to collaborate with partners to create customized energy solutions that respond to their needs, as well as to manage and offer our customers complex contracts, in line with what is required by the evolution of the energy market. We are excited to continue to play a role of preferred partner, specializing in offering solutions for a sustainable future of the energy sector”.
The construction of the wind farm will require an investment of approximately 600 million US dollars, in line with the provisions of Enel's 2019-2021 strategic plan. The plant is currently financed with the Group's own resources and is expected to be operational by the end of 2019. Once fully operational, High Lonesome will be able to generate approximately 1,7 TWh per year, avoiding atmosphere of over 1,1 million tonnes of CO2 per year.
Enel has signed a PRS agreement for a portion of the plant with a capacity of 295 MW, with the Alternative Risk Transfer division of the insurance services company Allianz Global Corporate & Specialty, Inc. (“Allianz”) and Nephila Climate, supplier of products for the management of meteorological and climatic risks. The PRS is a derivative financial contract that makes it possible to generate stable revenue streams for the plant, regardless of the volatility of energy prices and variations in production due to meteorological factors. This type of contract makes it possible to hedge the risk linked to the relationship between the hourly price of energy and volumes generated (shape risk) as well as the risk relating to changes in energy volumes and prices.
Under this agreement, High Lonesome will receive fixed payments, calculated on the expected value of future energy production, with a variable portion paid based on how much the actual realized returns from the project differ from the fixed payment. The PRS on High Lonesome, the largest of its type for a single plant worldwide in terms of capacity and the first for Enel, was created in collaboration with REsurety Inc., a leader in risk management and information services for renewables .
“The construction of High Lonesome is a clear testament to the popularity and success of innovative financial protection solutions for renewables,” he commented Karsten Berlage, Managing Director of Allianz Risk Transfers. “The majority of stakeholders today are interested in the growth prospects of renewables; for this reason, Allianz promotes flexible strategies such as PRS that mitigate these risks in the long term”.
“Renewable plants are increasingly challenged to produce predictable returns despite the increasing volatility in the value of intermittent generation,” he commented. Lee Taylor, Co-founder and Chief Executive Officer, REsurety. “We developed the Proxy Revenue Swap to offer unrivaled cash flow certainty, regardless of energy price volatility and weather patterns. We welcome the opportunity to partner with Enel, Allianz and Nephila to conclude PRS's largest deal." In Texas, Enel operates the 63 MW Snyder wind farm in Scurry County.
