Show notes
Masdar signs a land access deal for a 10 GW Egyptian wind project. Goldwind acquires GE's idle Brazilian wind turbine factory. Canadian pension fund CDPQ faces hurdles deploying energy transition capital in Asia. Sweden's EQT moves to acquire renewable developer OX2 for $1.5 billion.
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Allen Hall: I'm Allen Hall, president of Weather Guard Lightning Tech. And I'm here with the founder and CEO of IntelStor, Phil Totaro and the chief commercial officer of Weather Guard, Joel Saxum. And this is your News Flash. News Flash is brought to you by our friends at IntelStor. If you want market intelligence that generates revenue, then book a demonstration of IntelStor at IntelStor. com.
Renewable energy major, Masdar, is joint venture Infinity Power and partner Hassan Alam Utilities have signed a land access agreement with the Egyptian government for a massive 10 gigawatt onshore wind project. The deal provides the consortium with over 3, 000 square kilometers of land in West Suhag to conduct necessary studies and surveys to advance the project.
When completed, this wind farm is expected to generate nearly 48, 000. thousand gigawatt hours annually, reducing Egypt's carbon emissions by 9 percent and helping the country achieve its 42 percent renewable power target by 2030. It could also save Egypt an estimated 5 billion per year in natural gas costs.
Phil Masdar, once again, doing amazingly large projects.
Philip Totaro: Yes, and this thing is going to involve a significant amount of investment. And Mastar's the type of company that hasn't shied away from sourcing turbines from China, for instance. So this could end up being a big deal for Envision or Goldwind.
Egypt right now has, I think about 1. 6 gigawatts of wind operational, pretty much all along the the Suez Canal and the Red Sea. But this is, taking advantage of an ample amount of space that still exists out there and reasonably close proximity to to Cairo, where I think a lot of the power will end up getting piped into.
Fantastic news, again, to see, in general development in Africa. And we'll see how this evolves in terms of, what they line up as far as the supply chain players that are going to be a part of this.
Joel Saxum: If I was to recommend anything to anybody from Mazdar in the development phase or Hasan Alam in these, in, while they're planning this, Do a really good study on leading edge protection because you're going to need it.
Philip Totaro: Sand and wind turbine blades don't mix.
Allen Hall: Chinese wind turbine manufacturer Goldwind Technology has completed its acquisition of a wind turbine factory in Brazil from General Electric. The plan has been idle since 2022 when GE had left the company. Brazil by producing turbines at this facility, Goldwyn can meet local content requirements set by Brazil's largest financing bank, BNDES enabling wind farm developers to secure long term financing.
Goldwyn plans to begin mass production at the factory by the end of 2024 and aims to capture 25 to 30 percent share of Brazil's new wind turbine market in the coming years. Phil, a lot of moving pieces in Brazil at the moment with a Goldwyn entering and GE and others exiting Brazil.
Philip Totaro: There are. But Brazil's a bit of a challenging market at this point.
Goldwind thankfully at least has some projects that they've already secured the rights to and everything where they can deploy the turbines that they would domestically manufacture. But the Brazilian market is challenged by competition from hydro and solar, which have been a little bit cheaper and still seeing specifically for solar, a massive amount of deployment compared to what wind has been seeing.
I was also recently speaking to somebody from Brazil in regards to the situation for wind, and he was explaining that. Basically, the distribution companies there are playing a bit of a game as far as, companies and individuals who want to be able to source renewable electricity from the utility company.
You don't go direct to the, the government regulated utility companies. you have to go through these distribution companies that are, they obviously want to see the maximum amount of margin and so they want, a high price and a low cost of generation. Even though you've got wind where there are PPAs being executed that are, 19 or so 18 a megawatt hour US.
You're still seeing solar and hydropower get favored in, some of these power distribution networks. The good news is there's a significant amount of opportunity in Brazil. And The fact that GoldWind is actually taking over a factory from GE is interesting, because keep in mind that LM also has a factory in Brazil.
And while they're looking to potentially consolidate, one wonders if that factory might also be put up for sale. There are certainly some companies that would be interested in that. But it's interesting to, have Goldwind formally come into the the Brazilian market where they've already repowered a couple of projects.
But this looks like this is a long term commitment for them.
Allen Hall: CDPQ, one of Canada's largest pension funds, has announced difficulties in deploying the 7. 3 billion it had earmarked for energy transition investments. The fund's Asia Pacific head cited inadequate long term planning and support from Asian governments as a key reason for the challenges.
The pension fund emphasized that The need for complete accountability over a 20 to 30 year period when it comes to energy transition investments, despite many governments in the region expressing their need for such investments. So Phil, stability is the key to get renewable energy projects developed because they take so long to do and the return on investment happens at the back end on most of these projects.
It sounds like a CDPQ is having a hard time finding places to, to invest in at the moment.
Philip Totaro: And keep in mind as well that, interest rates in the United States will govern a lot of what happens in the rest of the world. If we have high interest rates, then other places are going to have high interest rates and as long as that, scenario continues to perpetuate, it's Going to make it harder to deploy capital so I can empathize with their, you, you read the headline and it's like they're having trouble spending money.
I can think of ways they could, but not necessarily profitably at this point, it's it is a challenge for investors. I think that markets will start to soften up within the next six months. Although the U. S. Federal Reserve still has a lot to say about interest rates and inflation at this point.
And they're keeping rates high. As long as that's the case companies like CDPQ are going to find it hard to to find places to, to park money and turn a reasonable profit. And it's a challenge for the entire renewables industry.
Joel Saxum: CDPQ is a, we want to make sure that everybody knows what we're talking about here.
That is a Canadian pension fund, so they cannot take risky investments, right? They want, they need something that's stable, they need something that's going to guarantee returns, that they're not going to lose any of their capital on, because that is, it's like the Canadian Teachers Pension Fund and things like that, so there's a lot of people that are, this isn't just an investment vehicle like a BlackRock where they're playing markets and trying to make money, they're investing people's retirement money basically into these renewable That's pretty cool.
energy developments. So if like this, in this case, we're talking about some developments in the Asia Pacific region. If the governments aren't going to get behind it to stabilize these investments, then they're not going to put that money out. So they may have to turn to other areas to put this 7. 3 billion to work.
Allen Hall: Swedish private equity firm EQTAB has made a recommended cash offer to acquire Renewable energy developer OX2AB for approximately 1. 5 billion U. S. dollars. The offer values OX2 shares at about 5. 60 per share, representing a 43 percent premium over the closing price. Just last week, OX2's founder and largest shareholder, Pease Industries, has agreed to accept the offer.
EQT believes that OX2 would benefit from transitioning to a more long term, sustainable business model by becoming an integrated renewables developer and asset owner. Now, Phil, does that make sense, that move by EQT?
Philip Totaro: Absolutely, if that integration is what you're trying to accomplish, because up until now, OX2 always has to find an off taker.
They've got a massive project portfolio that comes along with this, including I want to say it's almost 5 gigawatts that are under management it's something like 33 gigawatts that are, in their project development portfolio. They've got a huge, that's what's leading to that valuation, first of all, but that's a huge amount of capacity that they've otherwise got to find a buyer for in kind of a build, operate, and transfer business model.
They're in a pretty good position by partnering with somebody like EQT where it makes access to capital easier, access to an offtaker for the projects easier, which also provides them a bit more attractiveness and clarity as far as getting a power offtaker on board as well for that much capacity.