Aquila European Renewables Income (AERS) has announced that it has entered into an agreement to acquire 100% of a 100 MWp solar PV portfolio, otherwise referred to as the Greco portfolio, which is currently under construction in Andalucía, southern Spain. Upon Project completion, Greco will increase AERS’s total portfolio generation capacity by 30% to 432 MW. The addition of Greco will also double the portfolio’s overall solar PV capacity to 200 MWp and increase the portfolio’s allocation to solar PV from 29% to 47% by fair value, with the remainder being allocated to wind and hydro technologies.
Under the terms of the transaction, AERS will pay approximately EUR 90 million at the project’s completion, which is expected in late 2022. AERS says that an upfront amount will be paid at closing under agreement, but that the vast majority of the total cost is deferred until completion. The total consideration represents a fixed price for the acquisition and construction of the Project.
The Greco Portfolio
The Greco portfolio consists of two assets, located in Andalucía, in the south of Spain, which benefit from attractive solar irradiation yields. AERS says that the operating life of the Project is conservatively estimated as being 30 years, noting that technical due diligence and existing land leases can support a higher operating life. Construction is currently underway with fencing and earthworks activities, whilst procurement of all major equipment is now complete (including solar PV modules, trackers and inverters). Completion is contingent upon the Project receiving all of the requisite licenses and authorisations from local authorities (incl. the grid operator) and is expected by late 2022. AERS says that Greco is expected to provide 184 GWh of renewable electricity annually over its lifetime, equivalent to approximately 58 kt of CO2 avoidance per annum.
Looking to put a PPA in place
AERS’s investment adviser intends to secure a Power Purchase Agreement (PPA) for GRECO, prior to the project’s completion. The transaction is also subject to an earn-out mechanism. The Earn-out is calculated as 50% of the value uplift achieved between the actual PPA price entered into versus a reference PPA price. Payment of the Earn-out is due after Project completion.
AERS intends to fund the Deferred Consideration amount (including any Earn-out, if applicable) using its surplus liquidity of approximately EUR 144 million, which includes the undrawn revolving credit facility in place (EUR 40m facility limit) and represents the total liquidity available, prior to Greco.
Comments from Ian Nolan, chairman of AERS
“We are pleased to be able to secure another large scale, high quality solar PV project, which dramatically increases our allocation to solar PV, in-line with our portfolio targets.”
Comments from Michael Anderson, Senior Manager at Aquila Capital
“This is a material acquisition for the Company and enhances the overall portfolio balance between wind and solar technologies, in-line with the longer-term targets for the portfolio. The Deferred Consideration structure, combined with AERS’s sources of available liquidity also provides significant flexibility to pursue other investment opportunities whilst waiting for Project completion.”