kWh Analytics announced the successful closing of a wind energy proxy hedging risk transfer product for a 59 MW, 14-turbine wind project in Maine. The project was developed by an investment vehicle affiliated with Greenbacker Capital Management that invests in sustainable infrastructure assets.

The financial structure included a wind proxy hedge provided by global reinsurer Munich Re, advised by kWh Analytics, and used kWh Analytics’ indifference structure to quantify the debt.

This also marks the first time that a parametric wind hedge has been paired with kWh Analytics’ indifference structure to reduce the equity requirements for the project sponsor, allowing the sponsor to raise approximately 20% more debt capital, led by MUFG.

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Wind resources are highly volatile, resulting in tail-event distributions (P99) that can significantly impact debt size. Wind speed variability exceeds solar radiation variability, posing unique challenges for project financing.

The wind proxy hedging, combined with the kWh analytical indifference structure, addresses this volatility by optimizing the project’s P99 scenario with investment grade cash flow above the P99 wind speed.

This credit enhancement makes the project more attractive to lenders, leading to increased debt affordability. Combined with the wind proxy hedging and the kWh indifference structure, every dollar of premium paid for the product generates approximately $6 in additional loan revenue.

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Jeffrey Lehf (pictured above), head of US accounts for kWh Analytics, said the company provided a proprietary debt structure, applying expertise in modelling, analysis and risk management to help Munich Re integrate its modular solution into project finance.

“The resulting credit boost not only mitigates downside risks, but also improves the capital structure. It’s not just about financial engineering – it’s about accelerating the transition to clean energy by making wind projects more bankable and attractive to investors,” Lehf said.

“Our deep knowledge of project finance was critical in structuring this transaction,” said Bill McLauchlan, CEO of Munich Re Trading. “By leveraging our team’s longstanding experience in designing parametric risk transfer solutions, close collaboration with MUFG, and leveraging kWh Analytics’ unique market position, we were able to successfully implement an innovative risk transfer solution for this sponsor.”

kWh Analytics acted as advisor to Munich Re during the structuring process, leveraging its experience in designing renewable energy risk transfer products, such as Solar Revenue Put and Property Insurance. MUFG acted as sole lead arranger for the debt financing.

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