The government is set to decide on the transfer of the Tootsi wind farm, in Pärnu County, owned by state energy generator Eesti Energia, to the latter's own renewables subsidiary, Enefit Green. The move is happening to shore up Enefit's valuation ahead of a planned Initial Public Offering (IPO) and is designed not to fall foul of European Commission state aid regulations.
Eesti Energia wants to transfer the wind farm is to Enefit Green in order to boost its listing value, and to maintain the right to receive renewable energy support for the wind farm under the old support scheme.
The latter depends on a decision from grid distributor Elering, however.
Eesti Energia's supervisory board approved the transfer on April 22.
All of Eesti Energia's other renewables concerns fall under the Enefit Green umbrella.
Eesti Energia has been developing the Tootsi wind farm for 10 years now and says it holds all the correct documentation, including building permits, adding that the conditions for the final completion of the wind farm by 2023 have been met, aside from Elering's assent.
It did not transfer the wind farm to Enefit Green earlier, as a hedge against losing out on eligibility for support.
Eesti Energia keeping European Commission rules in mind
Under the European Commission's state aid rules, businesses are entitled to receive support under the former support scheme if the work had started before the end of 2016. Eesti Energia and Enefit Green should also form one economic unit under commission rules.
If Tootsi comes under Enefit's remit as planned, its share valuation is estimated to increase by around €100 million, meaning on the basis of a 49-percent IPO, the economic impact would be €49 million.
Eesti Energia also crossed more t's and dotted more i's by acquiring the 160-hectare plot from the forestry commission, the RMK, for €51.5 million at auction, though the opening price was €12 million.
As a renewable energy project and in line with Estonia and the EU's climate change goals, the project will be eligible for subsidies.
The government is due to give its approval for the transfer on Thursday, ERR reports.
Tootsi wind farm details
- A separate company, Tootsi Windpark OÜ, is to be set up, with current Eesti Energia board members Andri Avila and Margus Vals confirmed for its board.
- Share capital of this company is €24,500, set below the €25,000 which would require more auditing.
- The wind farm and its staff, buildings, facilities, and other assets will be transferred.
- While as a general rule, restructuring within an entity does not give rise to EU state aid rules considerations, analysts at the finance ministry say that further analysis is needed and state aid should be taken into account. At the same time, the ministry's opinion is the transfer is a transaction similar to one a private investor might make, meaning it does not constitute state aid.
- Enefit Green is 100 percent owned by Eesti Energia.
Eesti Energia was ready to make the IPO early on this year but the coronavirus pandemic and its economic fallout caused it to be delayed; it is now planned for the third quarter of this year.
The transfer has no bearing on Eesti Energia's own financial indicators, as it is within-group and non-monetary, which also means that there is no financial impact on the state budget.
Tootsi wind farm is planned to go operational in 2023.
Editor: Andrew Whyte