kWh Analytics has closed a parametric Wind Proxy Hedge risk transfer deal for a 79MW wind project in Virginia developed by Apex Clean Energy.
The transaction used the kWh Analytics Indifference Structure for debt sizing, with Munich Re providing the parametric hedge and MUFG and CIBC acting as lenders.
The Wind Proxy Hedge, combined with the Indifference Structure, is designed to address wind resource volatility by adding investment-grade cash flow above the P99 wind speed scenario. This approach enhances the project's credit profile and allows for higher debt capacity.
According to kWh Analytics, the structure generates approximately $7 of additional debt for every $1 of premium paid during the mini-perm period. The hedge covers wind speeds below a specified meters-per-second threshold, targeting downside scenarios that can impact project revenues.
A representative from Apex Clean Energy confirmed that the Wind Proxy Hedge structure implementation succeeded and that the company is “evaluating this product on additional projects.”
"The ability to materially improve project returns while reducing equity requirements makes this an attractive financing tool in our development portfolio,” the representative said.
"We are thrilled to have contributed to the success of the Rocky Forge Project and excited to execute on this structure with such an experienced sponsor and banking partners,” said Geoffrey Lehv (pictured above), senior vice president and head of US accounts for kWh Analytics.
Elsewhere, recent analysis from kWh Analytics highlights that operational gaps in battery energy storage systems (BESS) and photovoltaic (PV) solar projects are becoming a significant concern, with BESS losses now outpacing those in PV. The report notes that operational risk is an increasing issue for insurers and project stakeholders, as the renewable sector continues to expand.
The same report from kWh Analytics points out that many losses in the solar sector are due to operational issues rather than natural catastrophes, underscoring the need for improved data collection and risk modeling. This finding is prompting insurers and developers to focus more on operational performance and risk mitigation strategies.
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