Q&A – Nadara: Harnessing synergies in a merger

While Nadara might be the latest independent power producer to join the European renewables space, its parent company has been active in the sector for over two decades. In June 2023, the company was formed as a result of the merger between Ventient Energy and Renantis – both owned by institutional investors advised by JP Morgan Asset Management. 

The IPP, which rebranded as Nadara last month [July 2024], has a combined portfolio of 4.2GW of installed wind, solar, biomass and energy storage capacity across over 200 assets in Europe and the US. Nadara is also developing an 18GW development pipeline to execute over the next decade. 

inspiratia sat down with Toni Volpe, CEO of Nadara, to discuss the merger, and the company's plans moving forward.

Formerly the CEO of Renantis, Volpe highlighted the benefits provided by each constituent of the merger, and the need for scale in an increasingly competitive renewables sector.  

What was the rationale behind this merger? 

I have been in this industry for 20 years, and I believe we are moving into a phase where consolidation will become increasingly prominent. Size and scale are becoming vital for efficient and effective renewable energy operations. 

On one hand, growth in the market encourages new players to enter the sector and generates more fragmentation. On the other hand, however, there is a critical need for efficiency and scale. Consolidating assets under the same platform made the most sense for Nadara to be the most efficient, effective and scalable business.

Renantis and Ventient Energy were also extremely complementary businesses. Renantis was smaller scale – 1.5GW – and had spent more time in development activities. Ventient was a larger platform that focused on operational efficiencies. Combining the two was a natural way to build size and scale.  

Were there any challenges in getting the merger through? 

From a shareholder perspective, there were very few challenges. Of course, the rationale and potential value creation had to be explained to our investors, who understood the logic. We all saw the opportunities that a larger platform could offer.

And what kind of services does the new platform offer? 

Nadara services the entire value chain. We take a project from the early phases of development and land identification, all the way through developing, permitting, engineering, construction operations, repowering, and life extension. We also cover the financing and route to market for the energy generated through power purchase agreements (PPAs), operating on the power exchanges, dispatching and balancing assets. 

Nadara is a fully integrated company. Currently, we have about 4GW of operating onshore wind and 300MW of solar PV. Our pipeline includes further solar projects, standalone and co-located battery storage and additional onshore wind. We also have a sizable pipeline of offshore wind, with a number of projects currently in development with other partners.  

Our diversified approach is very strategic, and we will continue our exposure to all technologies across the value chain. Risk diversification on this platform is a key part of the mandate. 

Are you primarily focusing on floating offshore wind, or a mix of fixed bottom and floating? 

At present, our primary focus will be floating offshore wind. Some of our floating projects may have some fixed bottom turbines, but our portfolio, for the most part, is floating.

In Italy, it is simply the fact that if you want to develop offshore wind projects, you need to have floating turbines. This is an engineering and technical requirement. 

In Scotland, we participated in the ScotWind process and felt there were more relevant opportunities for floating offshore wind. We won three zones during this process and will specialise in this technology in the region.

What kind of opportunities does floating offshore present for Nadara? 

Aside from the technical constraints, floating offshore minimised potential impacts on the environment and biodiversity. Without a need to disturb the bottom of the ocean, the operations can proceed with a much smaller impact comparative to fixed-bottom projects.

Floating offshore is an industry that is not yet at scale, with no operational gigawatt-scale projects. The industrialisation of the supply chain for floating offshore has allowed for governments to create jobs and rapidly expand the potential of the sector. There is huge potential for this technology as a nascent industry.

We anticipate floating offshore will take off in the 2030s. Over time, we will likely run out of sites for fixed foundation projects, and we look forward to floating becoming more prevalent.

Moving forward, what sectors do you expect to grow the fastest in? 

In the next few years, Nadara will be rapidly accelerating in solar. While we are developing a few onshore wind projects in Spain, the next 2GW of our pipeline will be solar and storage, although the storage element will depend on regulations. In some countries like Spain, there is no regulation for energy storage. How much storage we deploy really depends on the regulatory framework of our regions of focus over the next few years. 

How will you approach financing? Will you consider project finance debt? 

We have a typical strategy for a large private equity-backed firm. In other words, our job is to deliver value for our shareholders by providing excellent end-to-end services.

We use financing in the most traditional way, using construction finance and project finance. We have a precise, articulated strategy on how to optimise our balance sheet on many levels. We usually try to create larger debt facilities where we bring in various lenders – this is one of the advantages of being supported by a large, long-term fund partner.

In the past, we used to do project finance for each wind farm, but now we use a larger non-recourse facility that aggregates several projects. We also use traditional corporate debt, so we have several layers of recourse and non-recourse financings.