Rezolv emerges as a key emerging markets player

Global Energy Report 2023
12 min read

Launched less than a year ago, Prague-based Rezolv Energy is set to become a key renewables player in South-Eastern Europe, with a 2GW pipeline in the market for project financing. By Cristiana Sandeva.

Rezolv was established in July 2022 by EnerCap colleagues Jim Campion, Shane Woodroffe, George Formandl and Alastair Hammond. with an initial €500m of equity backing secured by UK private equity player Actis via its Energy 5 Fund. The independent power producer is now in the process of raising up to €1.5bn of debt, which it aims to secure within a year from lenders including Erste, UniCredit, ING and the EBRD. It is quickly growing its pipeline and legacy in the renewables space, relying on its highly experienced founding partners, and working to build a solid investor base across equity and debt funding

The projects

The firm now owns a pipeline exceeding 2GW in Romania that it put together in less than a year, including the largest planned PV plant in Europe and one of the continent’s largest onshore wind projects. It is due to raise more than €1bn of debt for its Romanian projects, for which it is in talks with international and local banks. It is also soon due to join the first wave of international developers entering the Bulgarian market, with a two-phase 160MW PV initiative for which grid connection permits have already been granted.

In November 2022, Rezolv signed agreements for the acquisition of 100% of the rights to build a 1.04GW solar plant in Arad county in Romania, which is expected to be the largest PV in Europe when commissioned.

The €900m project is in late-stage development and was acquired from Romanian developer Monsson Alma, which started it in 2020 through special purpose company West Power Investments and secured grid connection permits in May 2022, prior to when Rezolv was even founded. KPMG advised Monsson on the sale of the project to Rezolv. Monsson is among the largest developers in Romania and is owned by Swedish-Romanian businessman Emanuel Muntmark. Commissioning is expected in 2025. Engineering procurement and construction works will be carried out by EPC businesses owned by Muntmark.

The Arad project has been renamed Dama. Rezolv is currently raising between €650m and €700m of debt. The EBRD and the EIB are expected to be on the development finance institution tranches for the total debt. Panels will be supplied from China.

Securing funding for the PV project will be more challenging than for wind projects in Romania, because European-supplied turbines can benefit from export credit agency coverage whereas the majority of PV plant comes from China. For example, wind turbine generators (WTGs) supplied by GE, SGRE or Vestas can benefit from ECA support from Euler Hermes of Germany or EKF of Denmark, which gives a certain amount of credit protection to international lenders that can lead to a lower overall cost of financing.

“For our Romanian PV project, I suspect that it will be a club of lenders that will provide the required debt financing,” Woodroffe said.

Outside of its individual development space, Rezolv is partnering in a 51:49 joint venture with UK-based pure-play green developer Low Carbon on the implementation of a 1.05GW wind portfolio in Romania. The three wind projects in the Low Carbon pipeline in Constanta region were acquired by the JV from Dutch developer NERO Renewables. The projects include two twin wind initiatives of 300MW each.

NERO has divested its entire Romanian wind portfolio to the Rezolv/Low Carbon JV. The projects had originally been planned 10 years ago and had already secured grid connection pre-pandemic, but were halted due to changes in Romania's green support scheme (GC). Financial close is now hoped for by year-end. Rezolv only stepped into the two projects last year, while development was already ongoing.

The Dunarea East and Dunarea West wind power plants, each with a total individual capacity 300MW, are in late-development stage and should be project-financed by year-end or by Q1 2024 at the latest. Low Carbon is looking to raise extra equity by closing a new round of fundraising. Mass Mutual, a US-based investor that is an existing funder of Low Carbon’s initiatives, is expected to make a significant investment in the funding for the two projects, PFI understands.

Development finance institutions (DFIs) will “definitely get involved” with those two wind farms, Woodroffe said. Alternatively, European export credit agency (ECA) involvement to cover credit risk on a portion of the debt financing is an option, given that turbine suppliers will most likely be sourced from Europe.

“This ECA credit cover linked to export of the WTGs helps introduce new lenders into Romania who may be unfamiliar with Romania’s power market or perceive it as risky despite its EU membership,” Woodroffe said. Rezolv only stepped into the two projects last year, while development was already ongoing. The two Dunarea projects in Constanta were originally named Adamclisi and Deleni, and NERO had signed partnership agreements with Low Carbon in 2020 for their development.

The third project that Rezolv took over from NERO with Low Carbon is the 450MW Vifor wind farm, originally names Vis Viva. The total debt being raised for Vifor is €600m, of which about €200m should be DFI debt and the remaining €400m commercial debt with ECA coverage. A preferred turbine supplier is due to be announced shortly on the project, which will influence the country of origin of the ECA insurer.

Local market challenges

Romania only recently re-introduced power purchase agreements within its regulatory space, with rules still in flux, such as the recent introduction of the windfall tax, which affects corporate power purchase contracts (CPPAs). This is because the CPPA will work like a financial hedge on the energy spot price, with the reference price being either the Romanian or another day-ahead price, such as that in the market where the buyer is located, Woodroffe explained.

“Rezolv is targeting long-term CPPAs with the direct sale of power to corporate and industrial entities giving long-term price certainty to both buyer and seller,” he said, adding that “windfall taxes, particularly unequal levels in the seller’s and buyer’s markets act as an inhibitor to CPPAs”.

For Dama PV, Rezolv is reportedly in talks with several potential offtakers including a big North American company that is active in the European CPPA space. The developer has also signed a term sheet for the sale of a minority percentage of energy from the Vifor wind farm.

The re-introduction of PPAs in Romania after a 10-year halt is opening opportunities but also bringing new challenges, Woodroffe observed. Buyers now have the option to source their power from multiple sources, which adds movement to the market, but uptake by the corporates is slow. While offtakers were previously limited to buying their energy from their local suppliers, nonetheless the CPPA market remains relatively nascent and corporate buyers are still learning how to procure long-term power directly from energy generators rather than signing short-term contracts from energy traders and suppliers, Woodroffe said. The execution of CPPAs requires a certain amount of inhouse energy procurement expertise and “this is not yet evident, with specialist advisers often leading negotiations on behalf of corporate buyers”.

Another issue complicating PPA implementation within the Romanian regulatory space is that of guarantees of origin (GOOs) in the country. Romania is not yet a member of the Association of Issuing Bodies (AIB), which issues and certifies GOOs on a standardised basis known as the European Energy Certificate System (EECS). Membership of the AIB is necessary for cross-border trading of the GOOs, which evidence that the offtaker has procured green electricity. If corporate buyers cannot prove their electricity consumption is green, then they will not buy power from renewable energy generators located in non-AIB countries such as Romania, Woodroffe said.

To support and enhance its investment in Romania, Rezolv is undertaking a number of actions “including lobbying the Romanian energy regulator and the ministry of energy, encouraging them to apply for AIB membership as soon as possible”, Woodroffe told PFI. Additionally, he said the company is exploring a number of credit enhancement mechanisms for local industrial companies of insufficient credit standing to make them more bankable.

“Not only does this support the debt financing, but it also reduces cross border reference price risk and it helps keep some of the benefits of Romanian’s natural resources in-country rather than see them flow to corporates located in other countries,” he said.

Rezolv’s strategy for now has been focused on the acquisition of existing developments at various stages throughout the development process, and project financing construction of assets. The company is building a balanced approach between individual investments in projects and partnerships with local players or with international peers. It has not taken on greenfield development initiatives yet.

The founders

Rezolv's chief executive Jim Campion and chief financial officer Shane Woodroffe have all been long-term partners at EnerCap Power Funds, based in Prague, alongside George Formandl and Alastair Hammond.

Campion, co-founder of Rezolv and the company’s acting CEO, has global energy expertise spanning 30 years across combined-cycle power projects in South-East Asia and biomass projects in the UK. He has been a partner at investment and asset management firm EnerCap for 12 years in the Czech Republic, for which he manages a renewable energy and storage-focused private equity fund that has commissioned more than 500MW of solar facilities since 2010.

Woodroffe, co-founding partner and Rezolv’s CFO, comes from an engineering background and turned to being a developer with an investment-focused mindset. He led project finance and privatisation mandates for renewable energy projects across the UK and Europe at PwC for eight years, spent two years in the energy and infrastructure project finance department of GBNP Paribas Fortis bank in London, and is a founding partner at EnerCap, from where he knows Campion. He has been the key figure behind the development of all of EnerCap’s project financing investments needed for projects in Central, Eastern and South-Eastern Europe regions, including wind, PV, biomass and cogeneration.

Woodroffe pointed out how EnerCap has played a key role in the establishment and progress of Rezolv, both in terms of the experience that working in clean energy asset management has provided towards launching a separate development firm, and because of the natural relationships and contacts established through EnerCap, both with commercial lenders and institutional investors, and with development finance institutions including the EIB and EBRD.

Having “knowledge of the markets from within” has been a crucial factor in determining investors’ immediate confidence in Rezolv, he concluded.

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