Coast is clear for Mainstream sale of Scottish wind farm project

Bird charity RSPB loses court battle to stop €2.3bn Neart na Gaoithe development

Eddie O Connor set up Mainstream in 2008 after Airtricity, the wind energy company he founded two decades ago, was sold to Scottish & Southern Energy, now SSE. Photograph: Alan Betson

Eddie O Connor set up Mainstream in 2008 after Airtricity, the wind energy company he founded two decades ago, was sold to Scottish & Southern Energy, now SSE. Photograph: Alan Betson

 

Energy entrepreneur Eddie O’Connor’s Mainstream Renewable Power plans to sell its wind farm project off the Scottish coast, which will cost £2 billion (€2.3 billion) to develop.

Mainstream’s planned 450-megawatt Neart na Gaoithe development off the east coast of Scotland passed a significant legal milestone on Wednesday as a bird charity was denied the right to appeal an earlier court decision which paved the way for the development.

However, the Scottish arm of the Royal Society for the Protection of Birds (RSPB) still has a final legal route open to it. It has 28 days to decide whether to apply directly to the UK Supreme Court to stop the Mainstream project and others, which were originally approved by Scottish ministers in October 2014.

“After more than two years and two court hearings, we hope that the RSPB acknowledges a fair hearing and allows us to get on with delivering the very significant benefits this project brings to the Scottish economy and its environment,” said Andy Kinsella, chief operating officer with Mainstream. “Once constructed, this £2 billion project will be capable of supplying 325,000 homes – a city the size of Edinburgh – with clean energy.”

Valuable contract

Sources have said that Mainstream retained corporate financiers at KPMG in the past few months to sell the project, which benefits from a valuable contract signed in 2015 with the UK state-owned Low Carbon Contracts Company that gives the wind farm an inflation-linked price for electricity it produces for 15 years.

While the group said over a year ago that it planned to raise €100 million of equity by the end of 2016 – ahead of a potential New York flotation in 2018 – it hasn’t made sense to finalise a deal with potential investors until final clarity on the Neart na Gaoithe development is clear, according to sources.

Securing a final green light would boost the value of the company, which is also active in Africa, South America and Vietnam, significantly.

Mainstream’s plans to sell the Scottish project comes a year and a half after the company entered exclusive talks with a consortium led by US-based power company InterGen to provide equity investment for the development. The deal fell through as the legal process dragged on.

A spokesman for the company declined to comment on planned disposal.

Mr O’Connor set up Mainstream in 2008 after Airtricity, the wind energy company he founded two decades ago, was sold to Scottish & Southern Energy, now SSE.

Raising capital

The company hired a former Wall Street investment banker, James McGinnis, late last year to head up a new division, Mainstream Renewable Capital, which will be in charge of raising capital for the group’s multi-gigawatt portfolio of wind and solar projects.

In September, Mainstream signed a deal with General Electric to build $1.5 billion (€1.3 billion) of wind power plants in Vietnam. The previous month, the company won contracts from the Chilean government to build and run $1.65 billion of wind and solar plants.

While both platforms, which are in addition to existing construction roll-out in South Africa and Chile, will be largely funded by debt, they will also require equity investment.

The Dublin-based company completed a $117.5 million stake sale in its main South African venture in July last year to a group of investors, including the Rockefeller Brothers Fund and International Finance Corporation, a part of the World Bank.