Norwegian utility issues US$110 million in green bonds to spark hydroelectric market growth

Norway Map

Long-term investments are the norm when it comes to hydroelectric projects and Nord Trøndelag Elektrisitetsverk Energi AS (NTE) is maintaining the status quo. On Nov. 19, the Steinkjer, Norway-based utility issued US$110 million in green bonds to refinance four hydroelectric projects it purchased in 2004.

NTE reportedly thinks refinancing the projects by using 3-, 5- and 7-year tranches is key to the company’s hydroelectric market growth. To that end, NTE corporate green bonds have varying maturity and a floating coupon rate:

  • US$36.7 million with a 3-year maturity; coupon is at a 3-month Norwegian Interbank Offered Rate (NIBOR) + 48 basis points (bps)
  • US$58.8 million with a 5-year maturity; coupon NIBOR +67 bps
  • US$14.7 million with a 7-year maturity; coupon NIBOR +79 bps

“The crucial thing to remember here is that the primary role of bonds, any type of bonds, green or otherwise, is to refinance debt, particularly bank loans,” said Beate Sonerud, Climate Bonds Policy analyst. “This indirectly leads to new investment in assets in the real economy by freeing up space on issuers’ balance sheets, allowing them to take on fresh loans to invest in new projects.”

In 2004, NTE purchased the remaining shares of Kraftverkene i Øvre Namsen (KØN) "The [four] Power Stations in Upper Namsen."

Tributaries from Børgefjell National Park in east central Norway help feed waters that become Namsvatnet Lake in the municipality of Røyrvik. Once the waters pass through a dam (HW 9-26-13) on the eastside Namsvatnet Lake, they become Namsen River. Namsen River is home to nine hydroelectric generating stations along its length of 228 km (142 mi).

The KØN purchase was a joint venture between NTE and the Norwegian Water Resources and Energy Directorate. NTE incurred existing debt from the following KØN hydropower plants:

  • 12-MW Linnvasselv in Strömsund, Sweden
  • 88-MW Tunnsjødal in Namsskogan, Norway
  • 16-MW Tunnsjø in Lierne, Norway
  • 8-MW Røyrvikfoss in Røyrvik, Norway

With regard to NTE, the company opened in 1919 and it is one of four companies in NTE Holding AS, which is wholly owned by the county of Nord Trøndelag. According to NTE, the company has an estimated 3.45 TWh of installed capacity generated mainly from small- to medium-sized hydroelectric plants.

NTE says its “core business is the production and distribution of electric energy through operating 28 hydro power plants and two windmill parks.”

Published reports indicate Sweden-based Nordea Bank AB, through its Nordea Markets Investment Banking section, is the sole underwriter of the NTE-issued green bonds. Nordea Markets, among its many services, finances bonds and equity in the Nordic Region.

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