- Project Finance
Apex Receives Environmental Finance’s Weather Risk Deal of the Year
The award honors Old Settler Wind for its innovative financing structure.
For the tenth year in a row, Environmental Finance is recognizing projects, people, and companies that have moved the needle in transitioning to a low-carbon economy. Old Settler Wind—which Apex Clean Energy developed, managed construction of, and is currently providing asset management services for—stole the spotlight with one of the news service’s honors.
In the coming years, we are sure to see more deals structured similarly to Old Settler Wind.
Apex prides itself on accelerating the shift to a clean energy future, and this year’s awards all center around a similar theme. Environmental Finance sought out the people and businesses behind the most significant opportunities and investments that are promoting the low-carbon economy or that are part of the solution to climate change.
Old Settler Wind received the Weather Risk Deal of 2017 for its inventive financing arrangement, a model for future deals throughout the wind industry. The 151.2 MW Texas wind farm, owned jointly by Northleaf Capital Partners and Apex Clean Energy, is part of a hybrid renewable portfolio, which also includes the 50.4 MW Cotton Plains Wind and 15.4 MW Phantom Solar Wind. The clean energy portfolio set precedent by using a proxy revenue swap that enabled third-party debt financing and tax equity commitments for the project.
Through the deal, Allianz Risk Transfer will acquire Old Settler’s revenues for a 10-year period in return for fixed annual payments. That arrangement, and the swap seller’s AA- credit rating, helped Northleaf and Apex arrange third-party debt financing and tax equity commitments.
Many view the deal as a successful structure that allows companies to hedge against risks associated with fluctuations in power generation and changing prices in the energy market. This risk management product essentially eliminates those risks and provides increased certainty in revenue projections. In the coming years, we are sure to see more deals structured similarly to Old Settler Wind.