Macquarie acquires 49.9% of Hydro’s renewable energy subsidiary in a landmark deal

Hydro has finalised the sale of 49.9 per cent of its renewable energy subsidiary, Hydro Rein, to Macquarie Asset Management. Initially announced in October 2023, this transaction marks a significant milestone in Hydro's strategy to expand its renewable energy portfolio.

The transaction has assigned a value of USD 333 million to Hydro Rein as of June 30, 2023, subject to any closing adjustments. Macquarie will contribute USD 214 million at closing, with the funds to be transferred by June 25, 2024. The remaining committed capital will be injected gradually as per the project requirements, ensuring a steady financial support for Hydro Rein's operations.

"We are excited to conclude the transaction, marking the next chapter in our renewable energy partnership with Macquarie Asset Management. Hydro Rein is well equipped to execute its ambitious growth agenda, with a strong project pipeline going forward. Industrial decarbonisation begins with renewable energy and Hydro Rein will be instrumental in supporting Hydro as well as other industries with the energy we need to reduce our CO2 emissions," stated Hydro's 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 the capital injection from Macquarie, Hydro Rein is expected to be fully funded for its current projects under construction and for the development costs of future projects in the pipeline over the next few years. The goal is to avoid calling for new equity from the owners beyond the already committed capital.

Hydro and Macquarie have maintained a longstanding partnership in the renewable energy sector. Since 2017, the companies have collaborated on various projects, developing 1.3 GW of renewable energy capacity. This includes several wind projects in the Nordics and a 456 MW onshore wind farm in Brazil. These projects feature power purchase agreements with Hydro, aiding in the decarbonisation of its operations.

Robust industrial partnerships

Since its inception in 2021, Hydro Rein has been actively developing 8.4 GW of gross capacity across its key markets in the Nordics and Brazil. The company has fostered robust industrial partnerships, culminating in long-term power purchase agreements for its projects, amounting to 5.3 TWh annually. These agreements notably include partnerships with Hydro's significant facilities, such as the alumina refinery Alunorte, the primary aluminium plant Albras, and the bauxite mine Paragominas. Additionally, Hydro Rein collaboratively initiated a wind project to supply clean electricity to support the Norwegian operations of the telecommunications giant Telenor.

"Decarbonising vital industrial materials like aluminium is a key challenge of the energy transition. Hydro Rein is helping to pioneer low-carbon aluminium smelting and is playing a leading role in enabling industries like the automotive sector to reach its decarbonisation targets. I look forward to joining forces once again with Hydro, combining our capabilities to unlock a greener future for industry, and the communities and markets served by industry," 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 per cent and Macquarie holding 49.9 per cent of the company. The JV encompasses all of Hydro Rein's assets in Brazil, Denmark, and Sweden, along with all Energy Solutions projects. Hydro Rein's projects in Norway will also be part of the JV, except for 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. Hydro Rein's organisation will support Hydro in developing these projects through service agreements.