kWh Analytics Pioneers First-of-its-Kind Parametric Wind Proxy Hedge for Greenbacker with Munich Re, MUFG

kWh Analytics, the market leader in Climate Insurance, announced the successful close of a groundbreaking wind proxy hedge risk transfer product for a 59MW, 14-turbine wind project in Maine, developed by a Greenbacker Capital Management affiliated investment vehicle that invests in sustainable infrastructure assets. This innovative financial structure included the use of a wind proxy hedge, provided by global reinsurer Munich Re, advised by kWh Analytics, and utilizing the kWh Analytics Indifference Structure for debt sizing. This implementation marks the first time a parametric wind hedge has been paired with the kWh Analytics Indifference Structure to reduce equity requirements for a project sponsor. The structure’s implementation enabled the project sponsor to raise roughly 20% more debt capital for this project, led by MUFG.

Wind is a notoriously volatile resource, resulting in distributions with tail events (i.e. P99) that can severely impact debt sizing. Wind speed variability far exceeds that of solar irradiance, presenting unique challenges for project financing. The wind proxy hedge paired with the kWh Analytics Indifference Structure addresses this volatility, significantly improving the project’s P99 scenario by adding investment-grade cash flow above the P99 wind speed. This credit enhancement makes the project more attractive to lenders, leading to increased debt capacity. By incorporating the wind proxy hedge and kWh Indifference Structure, each dollar of premium paid for the product resulted in ~$6 of additional loan proceeds.

Geoffrey Lehv, Head of US Accounts for kWh Analytics, commented on the innovation: “We provided a proprietary debt structure, applying modeling, analysis, and risk management expertise to assist Munich Re in incorporating its parametric solution to a project financing. The resulting credit enhancement not only mitigates downside risk but also optimizes capital structure. This is about more than just financial engineering – it's about accelerating the transition to clean energy by making wind projects more bankable and attractive to investors."

Bill MacLauchlan, CEO Munich Re Trading LLC, commented that: “Deep project finance knowledge was crucial in structuring this transaction. By leveraging our team's long-standing expertise in designing parametric risk-transfer solutions, collaborating closely with MUFG, and utilizing kWh Analytics' unique position in the market, we successfully implemented an innovative risk transfer solution for this Sponsor.”

Alberto Mihelcic Bazzana, Director at MUFG, said: “As a leader in project finance, MUFG is pleased to partner with Greenbacker, kWh Analytics, and Munich Re in developing new financing solutions that can expedite the energy transition process.”

kWh Analytics served as an advisor to Munich Re during the structuring process, drawing on their expertise in designing risk transfer products for renewable energy such as the Solar Revenue Put and Property Insurance. MUFG acted as Sole Lead Arranger for the debt financing.

ABOUT kWh Analytics

kWh Analytics | https://www.kwhanalytics.com/

Munich Re | https://www.munichre.com/en.html

Mitsubishi UFJ Financial Group, I www.mufgamericas.com

Greenbacker Capital Management | https://greenbackercapital.com