In a landmark deal, Macquarie acquires 49.9% of renewable energy subsidiary Hydro

Hydro has completed the sale of 49.9% of its renewable energy subsidiary, Hydro Rein, to Macquarie Asset Management. This transaction, originally announced in October 2023, represents a significant milestone in Hydro’s strategy to expand its renewable energy portfolio.

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The transaction valued Hydro Rein at $333 million as of June 30, 2023, subject to any closing adjustments. Macquarie will contribute $214 million at closing, with funds to be committed by June 25, 2024. The remaining committed capital will be injected incrementally in line with project requirements, providing ongoing financial support to Hydro Rein’s business.

“We are thrilled to have completed the transaction, marking the next chapter in our renewable energy partnership with Macquarie Asset Management. Hydro Rein is well-positioned to deliver on its ambitious development program with a pipeline of projects in the pipeline. Industry decarbonization starts with renewable energy and Hydro Rein will play a key role in supporting Hydro, as well as other industries, with the energy needed to reduce CO2 emissions,” said Hydro President and CEO Eivind Kallevik.

Impact of the transaction

The impact of the transaction will be reflected in Hydro’s second quarter income statement but will be excluded from “Adjusted Results.” With Macquarie’s capital injection, Hydro Rein is expected to be fully funded for current projects under construction and development costs for future projects in the pipeline over the next few years. The aim is to avoid owners calling for new capital beyond the capital already committed.

Hydro and Macquarie have a long-standing partnership in the renewable energy sector. Since 2017, the companies have cooperated on various projects, developing 1.3 GW of renewable energy capacity. This includes several wind projects in the Nordic countries and a 456 MW onshore wind farm in Brazil. These projects include power purchase agreements with Hydro to help decarbonize its operations.

Solid industrial partnerships

Since its inception in 2021, Hydro Rein has been actively developing 8.4 GW of gross capacity in its key markets in the Nordics and Brazil. The company has established strong industrial partnerships, culminating in long-term power purchase agreements for its projects worth 5.3 TWh per year. These agreements notably include partnerships with significant Hydro facilities such as the Alunorte alumina refinery, the Albras primary aluminum plant and the Paragominas bauxite mine. In addition, Hydro Rein jointly initiated a wind project to provide clean electricity to support the Norwegian operations of telecommunications giant Telenor.

“Decarbonizing key industrial materials such as aluminum is a key challenge of the energy transition. Hydro Rein helps pioneer low-carbon aluminum smelting and plays a leading role in enabling industries such as the automotive sector to achieve decarbonization targets. I look forward to joining forces with Hydro again, combining our capabilities to unlock a greener future for the industry and the communities and markets the industry serves,” commented Mark Dooley, Global Head of Green Investments at Macquarie Asset Management.

As of today, Hydro Rein operates as a joint venture (JV) with Hydro owning 50.1% and Macquarie 49.9% of the company. The JV includes all Hydro Rein assets in Brazil, Denmark and Sweden, as well as all Energy Solutions projects. Hydro Rein’s projects in Norway will also be part of the JV, with the exception of potential onshore wind projects near Hydro’s smelters, such as Snøheia Industrikraft. These specific projects will continue to be developed and owned by Hydro in partnership with local entities. The Hydro Rein organization will support Hydro in developing these projects through service contracts.