Investment company Aquila European Renewables Income Fund (AERIF), advised by Aquila Capital Investmentgesellschaft, announced that its wholly-owned subsidiary has entered into a sale and purchase agreement (SPA) to acquire a 100 MW solar PV portfolio (Greco project) currently under construction in Spain.
The Greco portfolio comprises two solar projects located in the region of Andalucia, in the south of Spain. The project’s operating life is 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, while procurement of all major equipment is now complete (including solar PV modules, trackers, and inverters).
Completion depends on the project receiving all the requisite licenses and authorizations from local authorities (including the grid operator) and is expected to come online in late 2022.
The project is expected to provide 184 GWh of renewable electricity annually over its lifetime, equivalent to approximately 58 kt of CO2 avoidance per annum.
Upon completion, the portfolio will increase AERIF’s total portfolio generation capacity by 30% to 432 MW, also double the portfolio’s overall solar PV capacity to 200 MW, 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 transaction, approximately €90 million (~$98.8 million) will be paid at project completion (Deferred Consideration). An upfront consideration amount will be paid at closing under the SPA (together with the Deferred Consideration, Total Consideration), noting that the vast majority of the Total Consideration is deferred until Project completion.
To secure payment of the Deferred Consideration, AERIF will provide a guarantee in favor of the parent of the engineering, procurement, and construction contractor for up to €100 million (~$109.8 million), which will be released upon payment of the Deferred Consideration amount.
Michael Anderson, Senior Manager at Aquila Capital, the Investment Adviser, commented: “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 AERIF’s available liquidity sources, also provides significant flexibility to pursue other investment opportunities while waiting for Project completion.”
According to Mercom Research, in April 2021, Aquila European Renewables Income Fund has entered into a Sale and Purchase Agreement to acquire 50% of the equity in an Ourique Portuguese solar operating asset. Ourique is in Alentejo, Portugal, and has an installed capacity of 60 MW. The solar project started its operations in December 2019.
Over 68 GW of solar projects were acquired in 2021, compared to 39.5 GW in 2020, according to Mercom’s 2021 annual solar funding and M&A report.