07.05.2019 | Axpo Nordic concludes complex deal in record time
When it comes to concluding a power purchase agreement (PPA), criteria such as price, flexibility, risk management, market knowledge, and last but not least, speed of execution are decisive. Usually, it takes several months from the first contact between the parties until the final signing of the contract. However Axpo Nordic AS, Axpo’s subsidiary for the Nordic and Baltic region, and Asper Investment Management recently closed a PPA for a large-scale wind farm in Sweden in less than four weeks – what may be a record in the market for this type of transaction.
Axpo is one of the international forerunners in the field of long-term power purchase agreements for renewable energies. The company is now present in 28 countries and active in 39 markets in Europe and the US. Axpo Nordic AS, which serves the Nordic region and the Baltic states, is one of the Group's most developed subsidiaries. Since its foundation in 2003, the subsidiary has become a leading marketer of electricity from renewable sources in Northern Europe.
Long-term electricity supply and purchase contracts are a particular focus, and represent one of Axpo Nordic's most important growth areas. A prime example of this is a recently concluded deal with Asper Investment Management, a London-based investment company specializing in investments in renewable energies. In just three weeks and six days, Axpo's specialists in Northern Europe managed to conclude an extremely complex PPA with their counterparty.
Such a speedy conclusion testifies to the experience of Axpo's team in Malmö - and represents the pragmatic approach taken by Axpo Nordic in handling a PPA.
Allister Sykes, Director at Asper Investment Management, reports: "The process to conclude a long-term PPA can be long and time consuming. Three weeks and six days is the quickest transaction we have ever seen at Asper when it comes to the category of long-term contracts."
As an investor, Asper has extensive experience in the implementation of complex PPA structures and had already indicated at an early stage what prerequisites had to be fulfilled for the conclusion of this specific PPA. Allister Sykes explains: "Early in the process Axpo showed strong appetite for the transaction, flexibility to take into account our needs, and willingness to commit to a tight time frame.”
Tomas Sjöberg, Managing Director of Axpo in Sweden, confirms that the time component of a PPA is definitely a challenge - and adds: "For our part, we outlined to Asper what was needed at our end to be able to manage the transaction within the asked-for timeline. It was frictionless working with Asper in this transaction."
As Asper has extensive experience in the Swedish market, both companies were able to focus on the important issues right from the start. Tomas Sjöberg explains: "The daily contact with Asper has been characterised by an open dialogue, so we have moved the whole process forward quickly. It was surprising how fast we identified and agreed to solutions, often benefiting both parties. Many of these decisions needed to be supported by internal functions such as Risk Management and Axpo Solutions AG’s Management Board. This process worked very well within Axpo and we are delighted to have met Asper’s requirements for terms and deliverability."
With this PPA in record time, Axpo has once again demonstrated its commitment and expertise in developing tailor-made energy solutions for its customers and counterparties. Axpo was also able to demonstrate that it can meet their needs and requirements even under great time pressure - regardless of whether they are investors, producers, industrial companies, energy utilities, SMEs or other market participants from the renewable energy sector.
It is undisputed that PPA will be the big topic in the market in the coming years. Numerous countries are increasingly reducing subsidies for the generation of electricity from renewable energies such as solar and wind power. This is leading to strong demand in the area of power purchase agreements: The PPAs are developing into a megatrend in the field of renewable energies. It is obvious that companies like Axpo, which are able to offer fast processes, will have a good starting position in this business in the future.
Asper Investment Management is a specialist investment firm that focuses on private investments in sustainable real assets including renewable power and sustainable heat networks, mainly in north European markets. It is one of the most experienced investors in Nordic power with an active presence since 2008. It serves institutional investors such as pension funds, insurance companies and funds-of-funds.