Allianz Global Corporate & Specialty’s (AGCS) alternative risk transfer unit (Allianz) has closed a 10-year proxy revenue swap for Invenergy’s Upstream Wind Energy Center to ensure stable revenues despite uncertainty of intermittent wind resource.
Allianz cooperated with Nephila and REsurety to provide an innovative financing solution for the renewable energy company’s Nebraska located 202.5 MW Upstream project which expects to complete construction and begin producing energy in the fourth quarter of 2018.
Jim Shield, Executive Vice President and Chief Commercial Officer at Invenergy, said; “at Invenergy, we apply innovative thinking to not just development, but also to financing of our clean energy projects.
“We’ve been considering the Proxy Revenue Swap structure since it came to market, and saw a great opportunity to apply this innovative new hedging structure to Upstream. De-risking our future revenues with this hedging structure was critical to securing the project’s financing.”
The swap protects the new wind project’s revenues from the financial risks associated with future energy prices and the uncertain volume and timing of energy generation.
It’s the fourth Proxy Revenue Swap to be closed since the innovative hedging product was launched in 2016, bringing the total of Proxy Revenue Swap-hedged wind project capacity to nearly 700MW.
As with prior Proxy Revenue Swap transactions, Nephila Climate (Nephila) partnered with Allianz in managing the risks associated with the transaction.
Nephila is AGCS’s strategic partner in weather and climate-linked risk management and works with the insurer to manage the risk exposures of the Proxy Revenue Swap, as part of a larger investment portfolio which includes other weather and climate-linked risks across a range of industries from energy to agriculture.
Richard Oduntan, CEO at Nephila Climate, said; “we are very pleased to have executed this hedge to help Invenergy manage its revenue risk for the project, as further proof that the leaders in renewable development see real value in this structure.”
REsurety provided the risk analytics used to support underwriting of the hedge prior to its close, and will serve as the calculation agent on an ongoing basis.
Lee Taylor, Co-Founder and Chief Executive Officer (CEO) at REsurety, said; “the uncertainty of the weather as a fuel is an ever-growing source of risk for the energy industry, and the Upstream transaction is a terrific example of how the market is responding to that challenge through the adoption of new risk management tools.”
Allianz’s Managing Director Karsten Berlage added; “Allianz was delighted to collaborate with the Invenergy team to help bring this project to fruition. The Upstream transaction serves as further confirmation of the value that wind projects see in the holistic revenue risk management enabled by the Proxy Revenue Swap product.”
