Big rise in borrowing by Green Energy to fund Cork wind farm

BORROWINGS AT Scottish and Southern-backed wind farm developer Green Energy Ltd almost trebled to €76 million last year as the company geared up for a €110 million project.

Figures filed with the Companies’ Registration Office show that Green Energy Ltd’s debts increased to €75.8 million by March 31st, 2010, its year end, from €27 million a year earlier.

The accounts point out that a facility given by Ulster Bank accounts for all of this debt. The money is for the development of a wind farm at Boggerah, Rylane, in Co Cork.

The wind farm will have the capacity to generate up to 57 megawatts of electricity. On an industry rule of thumb, this would cost about €110 million to build.

Typically, these projects are funded by a mix of 75 per cent bank debt and 25 per cent equity provided by the developers.

Ulster Bank’s facility is secured only on the constructed wind farm and the lender has only very limited recourse to the company for the debt.

Airtricity parent Scottish and Southern Energy owns a 50 per cent stake in Green Energy’s parent Green Wave. The other half is held by another entity, Craydel, in which businessman Michael Murnane holds a stake.

Green Energy’s balance sheet shows that its assets are valued at €87.3 million. The bank debt combined with an inter-company loan of more than €11 million left shareholders’ funds with a deficit of €14,000 at the end of last March.

Ulster Bank, Barclays and Bank of Ireland have been lending to wind farm developers over the last year, but all banks looking at the sector say they will only back quality projects supported by investors who have a track record in the sector.

Wind farms are attractive to banks because their revenues are guaranteed by the State, which passes the cost of this back to the market and ultimately to all electricity customers.

Scottish and Southern Energy owns Airtricity, one of the biggest independent operators in the Irish energy market.

The company competes with the ESB and Bord Gáis in the domestic electricity and natural gas markets, while it also supplies businesses and industries.