The 653MW Markbygden Ett wind farm – a sub-project of Europe’s largest wind complex Markbygden – has filed for restructuring proceedings with the Umeå district court in northern Sweden after getting into financial difficulties, apparently due to an unprofitable power purchase agreement (PPA) with Norwegian aluminium giant Hydro.
The wind farm operator closed a
corporate PPA with Hydro in 2017, which then was claimed to be the world’s largest green power offtake agreement. Under the terms of the PPA, Markbygden Ett after being commissioned in 2019 is slated to supply a fixed amount of electricity to the power unit of the Norwegian metals group for 19 years.
The sub-project at the time the PPA was closed with Norsk Hydro, as it was then known, was owned by Macquarie’s Green Investment Group and GE Financial Services, which between them had formed a 50-50 joint venture to raise around €800m to advance the project. The partners in 2018
sold 75% of it to the European subsidiary of Chinese state-run power giant CGN (which calls the project North Pole Wind).
“We are aware that Markbygden Ett AB has filed for a company reorganisation, in accordance with the Swedish Restructuring Act,” a Hydro press official told Recharge. “We are participating in a hearing in Umeå Tingsrätt (the local court administration) today.”
The project company ran into financial difficulties after the wind farm was unable to produce all the electricity needed for the PPA with Hydro. It was subsequently forced to buy power at extremely high prices from the grid at times wind turbines have been idle and then had to re-sell it to Hydro at the lower price agreed under the original deal, according to Swedish newspaper Dagens Industri.
Markbygden Ett last year had to buy replacement electricity for more than €61m ($65m), the newspaper said, adding that expenses this year will far exceed income.
CGN didn’t immediately comment when contacted by Recharge.
Markbygden Ett now wants to terminate the contract with Hydro Energi and during restructuring proceedings intends to sell electricity from the wind farm in the open market, the report added.
Corporate restructuring under Swedish law gives companies an opportunity to clean up their finances to avoid bankruptcy – similar to Chapter 11 proceedings in the US.
Markbygden Ett is part of the 2GW-plus Markbygden 1101 complex originally developed by Svevind, the developer recently
acquired by Norwegian energy giant Statkraft.
GE has provided its 3.6-137 turbines to Markbygden Ett, and also larger turbines from its Cypress platform to the 753MW sub-project Önusberget. Most other sub-projects feature Enercon machines.
The entire Markbygden complex is scheduled for completion in 2026 with a total capacity of 3.4GW, Statkraft has said.
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