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Scatec to drop the ‘Solar’ with hydro acquisition

The renewables business is set to acquire the SN Power hydropower operator belonging to Norwegian state-owned private equity business Norfund, with the $1.17 billion deal expected to go through in the first half of the new year. Scatec said the transaction could offer floating solar opportunities.

Renewables developer Scatec Solar is preparing to burnish its wider clean energy credentials with the $1.17 billion acquisition of hydro company SN Power from the Norwegian government.

The move will open the possibility of installing floating solar plants on hydropower reservoirs, according to Scatec.

The company said it expects the deal to go through in the first half of next year, provided the necessary competition and other approvals are secured. At that point, said Oslo-listed Scatec Solar in a press release published on Friday, it will become simply ‘Scatec’, to reflect its hydro, wind and storage assets.

Generation assets

The move will see Scatec acquire an SN Power hydropower portfolio with a gross generation capacity of 1.4 GW – and net capacity of 500 MW – in the Philippines, Laos and Uganda plus a development pipeline with a gross 2.5 GW of hydro capacity in Asia and sub-Saharan Africa. The added project capacity would give the enlarged business a 9.5 GW clean energy portfolio, according to Scatec.

The deal will be financed by Scatec cash, a $200 million vendor note – presumably issued by Norwegian state-owned SN Power owner Norfund in return for future business from Scatec – a $150 million loan and a further $700 million from four lenders. Northern European banking group Nordea, Oslo-based lender DNB, French giant BNP Paribas and Stockholm-based Swedbank will provide the latter figure, which will be refinanced within 12 months through borrowing and equity. Scatec said the new business will have net debts which will include NOK18 billion ($1.93 billion), of which a group-level NOK6.8 billion will incorporate acquisition costs.

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The enlarged business will have 3.3 GW of clean energy projects operating and under construction in 14 countries, Scatec said. The company added, when those facilities are all operational, in “early 2021”, they will generate around 4.1 TWh of clean power annually.

The transaction will offer the opportunity for an enlarged Scatec to expand in South East Asia and Africa, the developer said, and will involve Scatec and Norfund setting up a joint venture for the latter’s hydro projects in sub-Saharan Africa, with Scatec holding a 51% controlling stake.

Floating solar

“Hydropower and solar PV are complementary technologies, resulting in new project opportunities, for instance floating solar on hydro reservoirs,” said Scatec Solar CEO Raymond Carlsen. “With this transaction we see great potential in broader project origination and geographical expansion into growth markets in South East Asia and sub-Sahara[n] Africa. SN Power adds scale and significant cash flow from operating plants and will raise stakeholder value; benefiting customers, employees, shareholders, business partners, and the societies in which we operate.”

Norfund counterpart Tellef Thorleifsson added: “Norfund’s investment in SN Power has contributed to job creation, improved living conditions and avoided carbon emissions. By mobilizing private capital in SN Power, we can recycle significant funds for new investments, demonstrating the effectiveness of using development aid to invest in clean energy in developing countries.”

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Source: pv magazine