Fitch Ratings has affirmed
The rating reflects favourable regulatory environment under the German Renewable Energy Act with regulated fixed pricing until 2027, protective structural features, and a financial cushion sufficient to withstand Fitch rating case (FRC) production and cost stresses. It also reflects the refinancing risk on the notes' balloon amount under merchant conditions in 2027.
Under the FRC, the total average debt service coverage ratio (DSCR) is 1.35x for 2024-2027, with a minimum 1.18x in 2024, largely driven by one-off stresses on operations and maintenance (O&M) costs. The project life coverage ratio (PLCR) at maturity in 2027 stands at 1.97x, underscoring the ability to repay its debt over the remaining economic life.
KEY RATING DRIVERS
German Regulated Pricing until 2027 - Revenue Risk - Price: 'Midrange'
Until 2027, the project receives a regulated fixed feed-in-tariff of
The project's exposure to an electricity trading company and the grid operator
Early Actual Results - Revenue Risk - Volume: 'Midrange'
The project is protected against curtailment risk under the regulatory framework.
Wind resource forecasts and production estimates were prepared by two experienced advisers based on measurements from two masts located 76km and 92km from the project. The two forecasts showed consistent results, with an 8.6% difference between P50 and 1yP90. Actual generation has been between Fitch base case (FBC) and FRC. Together, this supports the 'Midrange' assessment.
Experienced Operator - Operation Risk: 'Midrange'
The project benefits from proven technology (
Manageable Refinancing Risk - Debt Structure: 'Midrange'
The 'Midrange' assessment reflects the refinancing risk in 2027 of a
The project also benefits from a six-month debt service reserve, a major maintenance reserve up to the maximum amount of the planned mid-life capex works, along with a
Under the FBC, the average DSCR is 1.63x and the minimum 1.35x in 2024. Under the FRC, the average DSCR is 1.35x with a minimum of 1.18x in 2024 and a PLCR at 2027 maturity of 1.97x. The minimum DSCR in 2024 is largely driven by one-off costs stresses assumed to capture the potential effect of cable repairs and the resolution of TenneT's claim linked to the registration of the power boost system. The profile is consistent with the investment-grade threshold of 1.3x for wind projects in line with our criteria guidance.
The risk profile of the notes up to their scheduled maturity in 2027 compares well with those of several onshore wind farm projects rated by Fitch in the US such as
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Projected DSCR consistently below 1.3x until 2027 and PLCR below 1.7x at 2027 refinancing under the FRC
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Projected DSCR materially above 1.4x until 2027 and PLCR above 2.0x at 2027 refinancing under the FRC
The annual DSCR as of
Average 2015-1H23 production remained consistently between FBC and FRC. During 1H23, electricity generation was 15% below FBC and 4% below FRC due to cable repair works.
The new power grid management system Redispatch 2.0. came into effect in
Energy market prices have normalised in 2023 after they reached an all-time high in
German government measures to reduce excess profits from high market prices expired in
Fitch notes an outstanding claim by Tennet, arguing
A tax audit identified potential liabilities for
The FBC applies a P50 production assumption and an additional 4% stress to production. The FBC also assumes 96% availability and a 15% cost stress to reflect higher- than-expected operating costs. The FRC uses 1YP90 production assumption with a 4% stress and availability levels of 95% until 2027 and 93% thereafter. In addition, the FRC assumes an additional cost stress of 10% from 2028, which reflects the maturity of SGRE's contract, and uncertainty regarding future costs.
Fitch conservatively stressed costs for 2024 to test the project's ability to accommodate potential one-off costs linked to cables repair and Tennet's claim. We believe this will not materially affect
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit.
(C) 2023 Electronic News Publishing, source