Emergy’s four billion kroner Ukrainian wind farm is running for half a machine, and the box could be empty by February if technical issues are not resolved.
Norwegian wind energy firm Emergy, with notable investors such as Aker, Kjell Inge Røkke, Trond Mohn and brokerage Arctic Securities on the owner’s side, is fighting a desperate battle for survival.
Ahead of the weekend, the company announced that it had officially abandoned an attempt to raise four billion kroner to fund the giant Zophia wind project in Ukraine.
At the same time, the already completed Syvash wind farm in the same country was hit by major technical problems, with many turbines out of service.
“Funding to cover project costs is about to be tight if electrical system problems continue to prevent normal operation,” reads an update for Emergy affiliate East Renewable’s bondholders, published this weekend.
It was also emphasized that there is a risk of running out of cash in February “if the project is prevented from resuming operations as planned”.
E24 has sent questions to Emergy about measures being considered to avoid such a scenario, but has yet to receive an answer.
Emergy, formerly NBT, focused on developing wind energy in countries like Mongolia and China before hitting Ukraine hard in 2018.
Built in cooperation with France’s Total Eren, one of the country’s largest wind farms, Syvash has a capacity of 250 megawatts and a price tag of more than four billion kroner.
Emerge funded its share of the project cost in part through a €75 million bond loan from the European Bank for Reconstruction and Development (EBRD), issued by East Renewable.
After severe delays due to several technical problems, the park was finally completed last summer.
Then a fire broke out in one of the park’s 63 wind turbines in October, and large parts of the plant have since been shut down to investigate and repair the causes of the malfunction.
Malfunctions were previously suspected both in the electrical connections and during the actual installation work.
The bondholders’ report states that “the most recent schedule assumes that all work was completed in the first quarter, with a certain probability that the work will slip into the second quarter.”
Affected by the turmoil
The Syvash facility is located in the Chaplynka region, at the foot of Lake Syvash, adjacent to the occupied Crimea.
Wind energy is sold to the state-owned company Energorynok, and at full capacity the park can provide electricity to 100,000 households.
E24 wrote before the weekend that Emergy had lost the opportunity to enter into a similar “feed-in tariff” agreement with the authorities to get power from its planned Zophia project, which is three times larger than Syvash.
However, Emergy notes that current prices in the private “dealer” market are currently higher than the tariff level for wind power.
“This creates an opportunity for attractive long-term purchase agreements, and the project is in constructive dialogue with potential buyers,” Emergy wrote in a statement before the weekend.
In recent months, the company has worked hard to delay the maturity of its large $1 billion debt.
A potential solution to the funding crunch arose when Aker announced its acquisition of $3.1 billion at the end of 2019, but the offer was withdrawn in January 2020.
The process was not facilitated by an increased level of conflict between Ukraine and Russia, the latter working to implement a massive build-up of troops along the Ukrainian border.
NATO chief Jens Stoltenberg said before the end of the week that The danger of conflict in Europe is real, after the meeting of NATO foreign ministers in a digital meeting at noon Friday.
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