Mainstream Renewable loss widens to €630m amid Chile write-downs

Mainstream Renewable Power, the Dublin-based green energy group taken control of by Norway’s Aker Horizons in 2021, saw its pretax loss widen to the equivalent of €630 million last year as it took a large impairment charge against assets in a “challenging” Chilean market.

The company’s founder, Eddie O’Connor, and a group of high-net-worth individuals that backed him in starting the company in 2008 continue to own a 16.5 per cent stake in Mainstream, which the Norwegians plan to float on the stock market in the coming years.

Mainstream recorded a 7.21 billion Norwegian krone (€630 million) pretax loss for last year compared to a loss of NOK 995 million (€87 million) in 2021, according to the latest annual report for Aker Horizons, published recently.

The Irish company, led by chief executive Mary Quaney, booked NOK4.24 billion (€370 million) of impairment losses on assets in its key market of Chile, where it won contracts in 2016 to develop 1.35 gigawatts (GW) of wind and solar energy projects at a cost of $1.8 billion (€1.64 billion). The Chilean platform — known as the Andes Renovables portfolio — benefit from power purchase agreements (PPAs) with the Latin American country’s government.

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“Challenging market conditions in the local Chilean power market impacted the group negatively, with grid capacity limitations leading to increased costs,” Aker Horizons said, adding that the impairment losses were a result of “difficulties experienced in the local Chilean power market, as well as rising interest rates”.

The report also disclosed that one of the three Andes Renovables portfolios — known as the Condor portfolio — has entered into “certain technical events of default” in relation to operational matters in its loan facilities, which, it said, was “customary for project finance facilities of this nature”.

While individual Condor projects are fully operational, they have not yet ticked the technical boxes to be defined as achieving a defined portfolio completion date.

“Mainstream is in active dialogue with the banks relating to obtaining the necessary waivers and approvals required to resolve the defaults,” the report said. “This dialogue is taking place at a time where there are significant challenges in the Chilean energy market at present, as exemplified by two other companies having notified Chile’s national electricity operator that they can no longer fulfil their PPA contracts.”

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The two companies the report was referring to are understood to be Maria Elena Solar and Ibereolica Cabo Leones.

“Mainstream is actively pursuing further mitigation in relation to these, including addressing the market inefficiencies with the regulator and government through industry associations and consulting with financial advisers on long-term capital structure and strategic and financial options,” the report said.

A spokesman for Mainstream declined to comment beyond the contents of the report.

Mainstream, in which Aker Horizons owns a 58.4 per cent stake with Japan’s Mitsui holding about 25 per cent, merged with Aker Horizon’s previous Aker Offshore unit last August in a deal where the Irish company contributed about 90 per cent of the global portfolio of development assets.

Mainstream had a project portfolio of more than 21GW across Europe, the Americas, Africa and Asia Pacific, with 1.5GW in operation and under construction at the end of 2022, according to the report. For context, peak Irish electricity demand is about 5.5GW.

Aker Horizons’s deal to take control of Mainstream in 2021 involved the Norwegian company at the time acquiring 75 per cent of Mainstream for €900 million, with a further €100 million payable this year subject to certain performance targets being met. It represented a 550 per cent return for original shareholders in Mainstream, including almost 600 Irish high-net-worth individuals. The maximum value of the sale was worth €550 million to Mr O’Connor alone.

Mitsui’s €575 million investment in Mainstream early last year diluted the holdings of other investors.