In June 2016, Southern Company made history: its subsidiary Southern Power became the first U.S. company to issue a green bond in Europe.
Green bonds are designed to fund projects that benefit the environment or climate, including wind and solar energy development.
The landmark issuance of €1.1 billion (approximately $1.2 billion) of green bonds underscores Southern Company’s ongoing commitment to developing a full portfolio of energy resources, including carbon-free nuclear, 21st century coal, natural gas, renewables and energy efficiency, and creating new products and services for the benefit of customers. The company will allocate an amount equal to the net proceeds from the bonds to renewable energy generation projects in the United States, such as solar and wind power generation facilities.
“What this does is provide capital that helps to promote and encourage investment in green-focused projects,” said Todd Perkins, Southern Company assistant treasurer.
“It’s an important tool for us to ensure we have the capital available to reduce our carbon footprint as a company,” added Steven Nichols, Southern Company capital markets manager.
This is Southern Power’s second green bond issuance in as many years. In November 2015, it completed the issuance of $1 billion of green bonds in the United States, becoming the first investment-grade power producer in the country to offer this type of security to support investment in sustainable energy generation.
While the green bond market in the United States is growing rapidly, the market in Europe is currently more developed. The latest issuance offers an opportunity to reach “a new set of investors that are really focused on green and socially responsible investments,” said Perkins.
Growth in the green bond market is stemming in part from investor demand. “For quite some time, even before we issued the first green bond, we actually had certain investors reach out to us and ask if we would consider issuing green bonds,” said Perkins. “It’s a segment of the bond market that continues to have a lot of growth potential.”
The bonds will not only help finance solar and wind projects, but they also “provide an opportunity for us to highlight what Southern Power is doing in that space and Southern Power’s growth in renewable energy,” said Perkins.
He noted that Southern Company has gone through a significant transition of its generation fleet. For example, “Over the last 10 years or so, the percent of our electricity produced from coal has gone from around 75 percent to about 25 percent in the first quarter of this year.”
Southern Power assembled its nationally recognized green energy portfolio through the development or acquisition of 30 solar, wind and biomass projects across the United States. In all, the Southern Company system has added or announced more than 4,000 megawatts of renewable projects since 2012.
“Southern Company’s overall commitment to providing clean, safe, reliable and affordable energy to the customers we are privileged to serve is at the center of what we do,” said Perkins.
The green bond issuance reflects an industry-leading commitment to innovation.
“These bonds support the development of pretty well-established renewable technology — solar and wind — and the issuance of green bonds is an innovative approach to financing these types of projects,” said Perkins. “We take a lot of pride in that and think it’s beneficial to support the development of the capital markets and capital available to support green projects and renewables.”