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After completion of the wind farm development the developer sells all project rights (all property rights, the building permit and the Power Purchase Agreement) to a SBU – a Special Business Unit, which will be the ultimate investor. All rights and obligations stated in the various contracts are being assigned to the SBU. This is why all contracts for any one wind farm have corresponding clauses for all rights and obligations. The SBU will then pay for the wind turbines plus infrastructure, such as roads, cables, etc. Often the developer supports the investor during the building phase, as the developer has operated in the area for a long time and has a good local network, therefore the SBU will be the subsequent operator of the wind farm.
In most cases the wind farms are financed by banks. Banks are investigating any project very carefully to minimise their risk. They want to be sure that the project is properly built and operated successfully combines financial viability with environmental and social soundness.
Risks: Banks get very sensitive when it comes to performance, regulatory and contractual risks. There is also the risk of wind yield as the wind resource determines the actual performance of the wind farm over its operational life.Recognised consultants can minimize this risk by providing expert wind reports. Even better would be local wind data measured at hub height during the development phase for more than one year.
A performance risk is when the wind turbines do not function properly or when they are not repaired quickly after a failure occurs, which would prevent the electricity from being produced and sold. Wind turbine manufacturers are aware of these requirements and warrant a certain availability level (mostly between 95% and 97%). They would be penalised if such a level is not reached.
In regards to regulatory risk, typically wind power projects are financed for a period of 10-15 years. This requires a certain level of political and legal stability for the entire financing period.
Furthermore the banks want to exclude any contractual risk; land lease contracts, building permits, conditions, grid connection agreement and turbine supply agreements. This means that the wind farm developer who is negotiating the initial contracts has a significant influence and carries responsibility on the bankability of the project.
Since NewEn has extensive and valuable contacts to investors, banks and manufacturers we are well informed about any requirements along the process.