International energy company Element Power is embarking on a new business path crafted for Europe’s increasingly cutthroat renewables sector.
Chief executive Mike O’Neill described Element as “IPP ready” and preparing to shift from a traditional ‘develop and sell’ model to a pipeline approach in which investors join early and commit for the long haul.
“It is a new model and it will determine our success for the future,” he said of the prospects for life as an independent power producer.
“Given our ability to seamlessly transition from development into construction and operations, a natural step of us in contemplating the future market is to bring our own capital through to invest in projects.”
O’Neill said investors could tie up directly with Element “through the development engine across the whole lifecycle of projects, or alternatively by some form of framework arrangement”.
He added: “In the former model this would enable investment equity to access a strong pipeline of projects, have a platform to grow the portfolio and access higher returns.”
Element would “ideally” link with one or a very limited number of investors. The company does not foresee a fund-type structure with multiple investors, said O’Neill.
“I believe that successful development IPPs in the future market will need to be flexible, entrepreneurial and able to respond to changing market conditions and value additive opportunities. This points more towards an educated capital provider that can play a more active role.”
O’Neill said the ability to line up investors as well as projects, suppliers and power purchasers will be key as Europe completes its transition to competitive auctions.
The evolving strategy also offers the opportunity to tap into Element’s increasingly diversified business, said O’Neill.
The company is looking to build on its existing 2GW portfolio of future projects and interconnectors with a doubling of its development stable and entry into two new geographical areas over the coming two to three years.
Element is already active in Ireland, Sweden, Finland and the UK and is involved in wind farms, battery storage and the Greenlink merchant subsea wire across the Irish Sea.
Greater interconnection capacity is “absolutely critical” to facilitate increased penetration of renewable energy and reduced curtailment in wind-rich markets such as Ireland, said O’Neill.
Greenlink will connect the Republic’s transmission system and the UK grid network and is due to have final permits in place in 2019 ahead of anticipated financial close before end-2020.
The company is also increasing its asset management activities for wind farms it previously developed and sold on with the potential to expand the offering to third-party projects.
In the energy storage arena, Element earlier this year sold the 25MW Tynemouth project in north-east England to Enel of Italy.
The €20m battery installation will be up and running next year and will provide enhanced frequency response services to system operator National Grid.
This web exclusive article first appeared in subscriber-only newsletter reNEWS on December 21; part two on Element Power’s onshore wind plans will be published exclusively on www.reNEWS.biz tomorrow.
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Image: the 17.5MW Coollegrean wind farm in County Kerry, Ireland, built this year for NTR by Element Power and featuring Nordex N90/2500 turbines (Kevin Arkins)
