The Government of Greenland has finalized the framework for the upcoming tenders for the Tasersiaq and Tarsartuup Tasersua hydropower projects. Recognizing the critical importance of the government take model to investors and lenders, the Government has designed a model that supports bankable project structures while ensuring that public value is captured from the development of Greenland’s largest hydropower resources.
The government take will apply exclusively to the hydropower plants and will consist of two clearly defined elements:
- a resource rent per unit of produced energy.
- government co-ownership through preference shares without capital contribution.
Both elements will be subject to competition in the tender process.
Ressource rent
The resource rent will be structured as a fixed fee per produced kilowatt-hour (kWh), payable to the Government of Greenland. This approach provides investors with a high degree of predictability, as the government take is directly linked to energy production rather than cash flow or earnings. The level of the resource rent will be determined through the upcoming tender, allowing bidders to calibrate the fee to the project’s financial capacity and financing structure.
To support early-phase cash flow and debt servicing, bidders may propose a progressive resource rent structure, with a lower rate in the initial years of operation and a higher rate once a substantial portion of project debt has been repaid.
The size and design of the fee will be included as competitive parameters in the tender.
Preference shares
The Government will also participate as a minority partner through preference shares, without capital contribution. These shares grant defined dividend rights designed to protect project bankability, with investors’ preference amounts and required returns paid first. The model may include a tiered dividend structure, under which the Government’s share increases over time as project debt is reduced. The Government will not be financially liable for project losses, since there will be no capital contribution, and the Government is therefore not expected to hold voting rights, ensuring that operational control remains with the investors and decision-making processes remain commercial and efficient.
The size of the preference share, the preference amounts, and the required returns will be included as competitive parameters in the tender.
Through this government take model, the Government of Greenland aims to offer investors clear risk allocation, predictable public charges/payments, and flexibility in financial structuring, while ensuring long-term societal returns from the country’s largest known hydropower potential.
The model is intended to attract experienced developers and long-term investors with the capacity to deliver, finance, and operate complex hydropower projects under Arctic conditions.
For further information,please contact Maja Heegaard at hydropower@nanoq.gl