Aquila European Renewables (AERI) has announced that Jaén, a 50 MWp solar PV asset located in southern Spain that is part of the Greco portfolio, has completed construction and is now operational. Jaén was acquired, in full, in March 2022 and following the completion of the project, AERI has paid consideration of €42.5m to the developer, representing 95% of the total deferred consideration due under the existing sale and purchase agreement (SPA) for Jaén. The remaining 5% of the Jaén deferred consideration is expected to be paid by the end of the first quarter of 2023.
81% increase in total operating capacity versus 2021
As announced in October 2022, Jaén entered into a five year pay-as-produced power purchase agreement (PPA) with Statkraft Markets GmbH, whilst hedging 70% of P50 production. Following the completion of construction assets Jaén, Albeniz and The Rock, as well as the acquisition of Tiza in 2022, the Company has added approximately 185 MW in operating assets to the portfolio, increasing total operating capacity by 81% (compared to 2021) to approximately 413 MW.
Power Purchase Agreement Secured for Guillena
AERI’s investment adviser has secured a seven year pay-as-produced PPA for Guillena, a 50 MWp solar PV project located in southern Spain, representing the second asset within the Greco portfolio. Like Jaén, the PPA was signed with Statkraft Markets GmbH “at an attractive price”, whilst hedging 60% of P50 production. The pricing terms remain confidential.
Following the completion of Jaén, Guillena remains the only asset under construction in AERI’s portfolio and is expected to be completed by Q2 2023. Completion of Guillena will also trigger AERI’s deferred consideration payments under the sale and purchase agreement.
Earn-out mechanism
In addition to the deferred consideration payments for both assets, the transaction is also subject to an earn-out mechanism, which is calculated as 50% of the value uplift achieved between the actual PPA price entered into versus a reference PPA price. After entering into PPAs for both Jaén and Guillena at more favourable terms than the acquisition case, AERI expects to pay an Earn-out before 31 December 2022. AERI says that it is pleased to have been able to secure two long-term PPAs at highly attractive prices in 2022 for a significant part of the portfolio, with Greco representing approximately 16% of its Gross Asset Value (GAV) as of the third quarter of 2022 on a pro forma basis.
Deferred consideration funded from surplus cash and AERI’s RCF
AERI says that it has funded the deferred consideration for Jaén via a combination of surplus cash on hand and also a draw-down of €24m under its existing revolving credit facility (RCF). Approximately €65m currently remains undrawn under the RCF and AERI says that it expects to continue to utilise its surplus liquidity and RCF to fund its remaining outstanding commitments related to Project Greco, estimated at €47 million. Based on AERI’s GAV as of the third quarter of 2022, AERI says that total gearing is expected to increase to approximately 30% on a pro forma basis after fully funding all outstanding Project Greco commitments.
Following completion of Jaén, The company’s allocation to construction assets has been reduced to approximately 1% of total GAV, based on the third quarter NAV. Under the its investment restrictions, AER can invest up to 30% of GAV in assets under development and/or construction.