By Kristy Dorsey

Edinburgh’s Red Rock Power has made its first move into Europe with the acquisition of a 50 per cent stake in a major Swedish wind farm.

The company, a wholly-owned subsidiary of China’s SDIC Power Holdings, has purchased its share in the Overturingen onshore wind farm from Green Investment Group for an undisclosed sum that chief executive Guy Madgwick described as the "market price”. It is now partnered with Nordic infrastructure manager CapMan Infra on the 56-turbine joint venture.

The acquisition is described as a “key milestone” for Red Rock, which was acquired by SDIC in 2015 from Spain’s Repsol. Mr Madgwick joined the firm two years ago with a remit to re-shape the business as an investment platform for renewable energy projects across Europe.

The deal for the 240.8MW Overturingen wind farm took a year from initial agreement to complete, and was delayed in part by the coronavirus pandemic. Red Rock, which has interests in a number of UK wind projects, is now keen to accelerate its expansion into other European markets.

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“The remit is Europe – it is not just Scotland,” Mr Madgwick said. “It was important to do a European deal this year, though it has been difficult.

“Although we are described as a wind power company, we will invest in a range of sustainable energy projects. Solar is something we looked at this year, though we weren’t able to go ahead with that particular project. Battery storage makes perfect sense, and I would say the hydrogen economy makes sense as well, though commercially that market is probably a couple of years further down the line.”

Located in central Sweden, Overturingen reached commercial operation earlier this month and will generate approximately 805.5GW hours per year.

Norwegian aluminium company Norsk Hydro has agreed to buy most of the wind farm’s output for the next 29 years in what is believed to be one of the longest power purchase agreements (PPAs) ever seen within the industry. A second customer, NEAS Energy, has agreed to a 10-year PPA for the remainder to power approximately 25,000 households.

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As a country where it is possible to build “at scale”, Mr Madgwick said Sweden is an attractive market.

“Sweden’s commitment to renewable energy and wealth of natural resources meant it was an obvious key target for us as we set our sights on expansion into other European markets,” he added.

“We are delighted to be partnering with CapMan Infra and bringing the Overturingen wind farm into our growing portfolio. We hope to gain a greater understanding of the local industry as we continue to identify acquisition and development opportunities in the region.”

When SDIC acquired the business in 2015, its interests included a 25% stake in the Beatrice Offshore Wind Farm, as well as a speculative 50% stake in what were then proposals for a 700MW offshore wind farm at Inch Cape in the east of Scotland. The latter recently received approval to increase capacity up to 1GW, and is currently in development with Irish energy group ESB.

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In October 2018, Red Rock acquired the 50MW Afton wind farm at New Cumnock in Ayrshire to round out its current portfolio. Afton has been operational since February 2018.

Based in Beijing, SDIC Power has a total installed capacity of more than 34GW, more than half of which is generated from renewable energy installations. It is listed on the Shanghai Stock Exchange, and earlier this year achieved a London listing through a global depositary receipts (GDR) issue.

Mr Madgwick said there is “a wall of money” waiting to be poured into renewables that is forcing investors into taking smaller returns. Despite those difficulties, he said it is “essential” that Red Rock completes further deals in the coming year.

“I think as we come out of the pandemic, there is going to be a lot of activity in this area,” he added.