Good Energies sells Romanian wind farms for €1.1bn

The exit, which was made in light of Romanian regulatory changes on the horizon, came as a ‘disappointment’ to the renewable energy-focused private equity firm, which had looked forward to building the largest wind farm development in Europe.

Continental Wind Partners, a renewable power developer backed by cleantech private equity fund Good Energies, has sold two Romanian wind farm developments to Czech-owned power utility CEZ Group for €1.1 billion ($1.6 billion).

The two-stage, 600 –megawatt project will be built in the Southeast Romanian province of Dobrogea, near the Black Sea and will constitute the largest onshore wind farm in Europe. About 350-megawatts of capacity would become operational by the end of 2009 and the remainder a year later.

Andrew Lee, Managing Director of Good Energies, told PEO that the sale of the development was catalysed by the expiry in 2012 of Romania’s Green Certificate regime, which requires suppliers of energy to purchase green certificates from producers of renewable energy. The future revenue from such certificate sales allows developers to bank finance the construction of a wind farm.

Normally, however, such a regime is put in place for 12 years. And with only four years left until the expiry of the current regime, Continental was unable to secure non-recourse bank debt financing for the project. As a result, the company sold the project to CEZ, a strategic investor in the sector.

“We were disappointed really to have to do that,” Lee said. “We were hoping to build it”.

However, Lee cautioned that Continental is not out of the running in pursuing renewable energy projects in Eastern Europe. He mentioned that Continental will look again to pursue wind projects in Romania once the Romanian parliament renews the green certificate program. Additionally, the wind developer has a total project pipeline of about 4,500-megawatts, which he said “is a big number”, spread across Romania, Poland, Bulgaria, Croatia and Turkey.

Continental became interested in the project as a result of what Lee called the strong fundamentals of the Romanian energy market. In 2007, the EU member state generated only .07 percent of its power from renewable energy sources. Yet by 2020 the European Commission will require each member state to originate 20 per cent of its energy consumption from renewable sources, such as wind.

Good Energies, which originally invested in Continental in April 2007, is one of the largest investors in the renewable energy and energy efficiency industry. Its annual investment budget is $500 million (€350 million) and the current market capitalisation of its portfolio amounts to more than $6 billion. The firm is owned by COFRA, the family office of the Brenninkmeijer family in Zug, Switzerland.

Shares of CEZ ended the day .5 percent lower on the Prague Stock Exchange, ending the day at 1,234 Czech Korunas (€50.4).