Press release from Marketwire
Northland Power Acquires Rights to Majority Equity Stake in 600 MW North Sea Offshore Wind Farm
Thursday, August 01, 2013
Northland Power Acquires Rights to Majority Equity Stake in 600 MW North Sea Offshore Wind Farm08:30 EDT Thursday, August 01, 2013
TORONTO, ONTARIO--(Marketwired - Aug. 1, 2013) - Northland Power Inc. ("Northland") (TSX:NPI)(TSX:NPI.DB.A)(TSX:NPI.PR.A)(TSX:NPI.PR.C) today announced it has entered into agreements for the rights to acquire a majority equity stake in Gemini, a 600MW offshore wind project currently in advanced development. Gemini is located 85 kilometres off the coast of the Netherlands in the North Sea, which combines one of the strongest and most reliable wind resources in the world with favourable sea bed conditions.
Northland has entered into agreements with a highly qualified team of offshore developers and contractors. The team includes Typhoon Offshore B.V., an experienced Netherlands-based developer of offshore wind projects in the North Sea; Siemens, the world's leading supplier of offshore wind turbines (via Siemens Financial Services); Van Oord Dredging and Marine Contractors B.V. (Van Oord), a leading Netherlands-based international marine contractor with an excellent track record in offshore wind farm construction and a leading position as EPC contractor in offshore wind projects; and HVC N.V., a joint venture of 48 Dutch municipalities and six water regulatory authorities.
In 2010, Gemini was granted two 15-year agreements with the Government of The Netherlands through a competitive tender under the government's Sustainable Energy Production Incentive (Stimulering Duurzame Energieproductie, "SDE") program. These agreements provide a premium price for the large majority of the wind farm's output for 15 years and incorporate mechanisms that reduce revenue exposure to wind production volatility.
Northland intends to actively participate in Project Gemini by taking a lead role during the remainder of development as well as construction and operations. Northland's final investment is subject to meeting conditions for closing, formal documentation and the approval of Northland's Board of Directors. Siemens' final investment is also subject to approval by their Board of Directors. Northland has appointed a Committee of its Board to oversee Northland's involvement in the project consisting of James C. Temerty, Linda L. Bertoldi, Sean Durfy, Pierre R. Gloutney. Upon closing, Northland will acquire a 55% interest in Gemini.
Gemini will play an important role in helping the Government of Netherlands' achieve renewable energy targets mandated by the European Union's Renewable Energy Directive, which calls for all Member States to reach a 20% share of energy from renewable sources by 2020. There is currently 5 GW of installed capacity in 58 operating offshore wind farms in
European waters with another 5.5 GW in construction or advanced development. According to the European Wind Energy Association (EWEA), it is anticipated that there will be up to 150 GW of installed offshore wind power in the EU by 2030, meeting 14% of the EU's electricity demand.
As nations around the world increase their use of renewable energy sources, offshore wind has become one of the fastest growing sectors. With offshore wind projects also underway in several other jurisdictions, including the United Kingdom, Japan, and the U.S., it is projected (http://www.rolandberger.com/media/pdf/Roland_Berger_Offshore_Wind_Study_20130506.pdf) by Roland Berger to become a $177 billion global market by 2020.
Once operational, Gemini will be one of the largest wind farms in the world, and will produce approximately 2.5TWh annually - enough electricity to power more than 785,000 households. According to a July 2013 report (http://www.ewea.org/fileadmin/files/library/publications/reports/Deep_Water.pdf) by the EWEA, offshore wind power in the North Sea alone has the potential to meet the European Union's electricity consumption four times over and the technology enjoys significant support, given its reputation for being a clean, renewable, efficient and safe power source.
Gemini is well advanced, having received its major environmental permits, and is close to finalizing its major contracts for turbine supply and balance of plant engineering, construction and procurement. The project will be constructed under a two-contract strategy involving Siemens and Van Oord to reduce interface risks. Siemens Wind Power was selected as the preferred supplier for the wind turbines; it is intended that they will install, and then operate and maintain them, under a long-term service contract. Van Oord will be responsible for supply and installation of the wind turbine foundations and the entire electrical infrastructure, including the offshore high voltage substation and electrical cable, as well as the transmission infrastructure and installation of the turbines.
"Today's announcement underscores Northland's commitment to fostering sustainable growth and delivering steady returns to our shareholders," said James Temerty, Chairman of Northland Power's Board of Directors. "Northland's entry into the burgeoning offshore wind sector is consistent with our strategy of developing and investing in opportunities with long-term secured revenue contracts with creditworthy counterparties that yield attractive rates of return."
Project Gemini's total cost is projected to be $3.8 billion, and is expected to be financed with a combination of non-recourse project debt, mezzanine financing and equity from the consortium. Northland's total net investment will be approximately $400 million, consisting of mezzanine and equity financing, in addition to credit support in the amount of approximately $32 million to secure the project revenue SDE agreements with the Dutch government.
Construction of Gemini is expected to start in late 2014; it is expected to reach commercial operations in 2017. The project is expected to be accretive on a free cash flow per share basis upon its completion, and provide project returns commensurate with Northland's investment criteria.
"As offshore wind becomes a more significant contributor to meeting the world's need for renewable energy, Northland's involvement in Gemini will position us very well for future opportunities and continued growth, noted John Brace, President and CEO of Northland Power. "This project provides an exceptional opportunity for Northland to integrate offshore wind into its diverse portfolio of clean and green technologies, while helping the Netherlands to achieve its renewable energy targets. We are already impressed by the high degree of support received from the Dutch government and the expertise of our partners. Together, we look forward to harnessing the enormous power of offshore wind, while helping to further advance the offshore wind sector."
Please note: All amounts expressed herein are in Canadian Dollars, unless otherwise indicated. A 1.35 Canadian Dollar to the Euro exchange rate is used herein to establish equivalent amounts.
Northland Power is an independent power producer founded in 1987, and publicly traded since 1997. Northland produces 'clean' (natural gas) and 'green' (wind, solar, and hydro) energy, providing sustainable long-term value to shareholders, stakeholders, and host communities. The company owns or has a net economic interest in 1,309 MW of operating generating capacity, with an additional 100 MW of generating capacity currently in construction, and another 200 MW of wind, solar and run-of-river hydro projects with awarded power contracts. Northland's cash flows are diversified over five geographically separate regions and regulatory jurisdictions in Canada, Germany and the United States. Northland Power's common shares, Series 1 and Series 3 preferred shares and convertible debentures trade on the Toronto Stock Exchange under the symbols NPI, NPI.PR.A, NPI.PR.C and NPI.DB.A, respectively.
ABOUT TYPHOON OFFSHORE
Typhoon Offshore is an Independent Energy Innovator with a unique expertise in offshore wind. Typhoon Offshore acquires permitted North Sea offshore wind projects and arranges the contracting, structuring and financing to bring the project from paper to actual electricity generating assets. Typhoon Offshore´s team has an unprecedented track record in successfully developing, contracting, structuring and financing renewable energy projects in general (1GW to date) and offshore wind in particular: the team was involved in the financing of Princess Amalia (120MW) and Belwind (165MW). The Typhoon Offshore team is currently working on offshore wind farm Gemini.
ABOUT SIEMENS FINANCIAL SERVICES
The Financial Services unit of Siemens (SFS) is an international provider of business-to-business financial solutions. SFS helps facilitate investments, providing commercial finance, project and structured finance with specific asset expertise in the energy, healthcare, industry, and infrastructure & cities markets. Employing more than 2,900 employees worldwide, SFS supports Siemens as well as other companies with their capital needs and acts as an expert manager of financial risks within the Siemens Company. By leveraging its financing expertise and its industrial know-how SFS creates value for its customers and helps them strengthen their competitiveness. Beyond that, financing is key in creating trust for technological solutions - and SFS acts as a key enabler when it comes to the market launch. As of September 30, 2012, the total assets of SFS amounted to EUR17.4 billion. For more information, visit: www.siemens.com/finance.
ABOUT VAN OORD
Van Oord is a leading international contractor specialising in dredging, marine engineering and offshore projects (oil, gas and wind). Marine ingenuity is what sets Van Oord apart. Van Oord is a family-owned business and employs about 4,500 professionals worldwide. The company has been involved in such noteworthy projects as Palm Jumeirah in Dubai and the port of Rotterdam's Maasvlakte 2 expansion. As an EPC (Engineering, Procurement, Construction) contractor, Van Oord is rapidly expanding its track record in the offshore wind sector in Northwest Europe, including projects such as Princess Amalia (120 MW), Belwind (165 MW), Teesside (6 2 MW) and Luchterduinen (129 MW). A new offshore wind transport and installation vessel, Aeolus, will become operational late 2013, and will be used for Gemini. www.vanoord.com.
HVC specializes in sustainable raw materials and energy and is located in the Netherlands. The company operates two waste-to-energy plants, a biomass-fired power station and two digesters, in Alkmaar, Dordrecht, Middenmeer and Zwolle, the Netherlands. HVC is owned by 48 Dutch municipalities and six water regulatory authorities. The company converts residual wastes and biomass to electricity, heat and gas. The electricity generated by HVS is supplied to the shareholders. The heat is supplied to businesses and dwellings in the vicinity of the plants.
This release contains certain forward-looking statements which are provided for the purpose of presenting information about management's current expectations and plans. Readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could". These statements may include, without limitation, statements regarding future EBITDA, free cash flows, dividend payment and dividend payout ratios, the construction, completion, attainment of commercial operations, cost and output of development projects, plans for raising capital, and the operations, business, financial condition, priorities, ongoing objectives, strategies and outlook of Northland and its subsidiaries. These statements are based upon certain material factors or assumptions that were applied in developing the forward-looking statements, including the design specifications of development projects, the provisions of contracts to which Northland or a subsidiary is a party, management's current plans, its perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. Although these forward-looking statements are based upon management's current reasonable expectations and assumptions, they are subject to numerous risks and uncertainties. Some of the factors that could cause results or events to differ from current expectations include, but are not limited to, construction risks, counterparty risks, operational risks, foreign exchange rates, regulatory risks, maritime risks for construction and operation, and the variability of revenues from generating facilities powered by intermittent renewable resources and the other factors described in the "Risks and Uncertainties" section of Northland's 2012 Annual Report and Annual Information Form, both of which can be found at www.sedar.com under Northland's profile and on Northland's website www.northlandpower.ca. Northland's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur.
The forward-looking statements contained in this release are based on assumptions that were considered reasonable on August 1, 2013. Other than as specifically required by law, Northland undertakes no obligation to update any forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.
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