Mainstream Renewable to cut almost third of costs after €1.1bn of losses

Mainstream Renewable Power, the Irish green energy group controlled by Norway’s Aker Horizons, plans to cut almost a third of its cost base after racking up more than €1.2 billion of pre-tax losses since the start of last year. The losses were driven by charges against assets in a “challenging” Chilean market.

Aker Horizons is looking to cut more than €45 million of annual costs at Mainstream, the equivalent of a 30 per cent of the Irish company’s total running expenses, according to figures contained in a presentation published by the Oslo-listed company on Thursday as it reported quarterly results.

A spokesman for Mainstream, which was founded in 2008 by green energy entrepreneur Eddie O’Connor, said the “vast majority” of the company’s 130 staff in the Republic will be unaffected. However, he declined to comment on how many of 650 roles globally will be cut.

“Following a strategic review of its business and in the context of a series of challenges impacting the renewable energy sector globally, including rising costs driven by inflation, interest rates and supply chain disruption, as well as significant and ongoing policy uncertainty, Mainstream is entering a rationalisation phase,” the spokesman said.

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“The company will reduce its cost base and will focus on progressing priority projects across its global portfolio which have the greatest potential to deliver value in the nearer term.”

Figures in the presentation document suggest Mainstream booked a further €10 million of impairment charges in the third quarter. That brings charges taken over 21 months against its key assets in Chile to the equivalent of €780 million.

Aker Horizons acquired a majority stake in Mainstream in 2021 and currently owns 58.4 per cent. Mr O’Connor and a group of Irish high-net-worth individuals who backed him in starting the company continue to own 16.5 per cent.

Mainstream won contracts in Chile in 2016 to develop 1.4 gigawatts (GW) of wind and solar energy projects – the equivalent of about a quarter of peak Irish electricity demand – at a cost of $1.8 billion (€1.6 billion).

A series of problems affecting the Chilean electricity market resulted in financial losses for a number of renewable energy companies in recent times. The problems include a lack of energy transmission and battery storage capacity in the market as well as the design of the so-called spot market, where energy is traded for immediate delivery.

Mainstream chief executive Mary Quaney told analysts on a call that debt restructuring at two of Chilean units, Huemul Energia and Condor Energia, is expected to be completed in the coming weeks after project lenders voted last month in favour of a deal. The spokesman declined to comment on the terms.

US investment firm Ares Management, a provider of junior construction finance to the Chilean platform, filed a lawsuit in July against Mainstream, claiming at least $313 million of damages for unpaid principal and interest. However, the case was settled by early September, helping the company to also reach a deal with senior creditors.

Two wind farms planned as part of the Chilean portfolio were put on hold earlier this year. One of these, known as Ckhuri, was due to “important archeological findings” on the site, which requires further survey work, Ms Quaney said. The second, Camen, was hit by an arson attack in June. This project “remains under review”, she said.

Ms Quaney noted, however, that Chilean authorities are taking practical steps to boost the renewable power sector.

Mainstream has a total wind and solar development pipeline of 19.4GW, spanning Chile, South Africa, the Philippines and Vietnam, and a further 10GW in pre-development. However, Ms Quaney said the company has narrowed its immediate focus to 10GW of assets with the greatest potential to deliver returns in the near term.