Alternative investment specialist Aquila Capital has issued a €50m green bond to fund the expansion of its Norwegian hydropower company Smakraft.
The bond has a five-year duration and will yield an annual interest rate of 1.9 points above Euribor. It is traded on the Oslo Stock Exchange.
Smakraft operates over 100 hydro plants in Norway producing 1 terrawatt-hour a year of electricity. The new funding will help increase that output to 2TWh a year by 2022 through acquisitions and the construction of new run-of-river plants.
Four acquisitions are planned, while seven facilities already owned will be refinanced, Aquila said.
The Norwegian Center for International Climate and Environmental Research rated the bond ‘Dark Green’, which is the top category reserved for projects and products that contribute in a sustainable fashion to a low-emission and climate resilient future.
Aquila Capital co-founder and chief executive Roman Rosslenbroich said: “Green bonds are an attractive instrument to continue driving the European energy transition.
“Institutional investors increasingly insist on such sustainable financing options because they offer more transparency as to how the capital is used at an equivalent risk-return-profile compared to conventional bonds.
“This is why we view this development not as a short-term trend but as one of the most sensible ways to mobilise the capital required to transform European energy grids. Norway, with its mature and robust hydropower market, therefore lends itself as a natural starting point.”