The companies have signed a 20-year USD-denominated power purchase agreement (PPA) with Alunorte, a major alumina refinery owned by Hydro Reins’s parent company, Hydro. The PPA covers 60% of the output of the project, which is located in the state of Rio Grande do Norte, with the remainder of the power to be sold on the domestic spot market. Concurrent to the signing of the power sales agreement, Equinor, Scatec ASA and Hydro Rein - each with an equal equity share in the project - will start construction. The partners will also jointly provide engineering, procurement and construction (EPC) services for the asset, while Scatec will provide operation and maintenance (O&M) and asset management services.
The total investment in the project stands at $1.3 billion, with total capex estimated at $430 million. The project, slated to be one of the largest single-phase solar parks in Brazil, was proposed in late-2020 with an installed capacity of 480 MW. However, the size of the project has been subsequently increased by the partners. The capex will be funded by a mix of non-recourse project debt and equity from the stakeholders. Financial close and the first disbursement of the funds are expected by the end of 2022. Enerdatics has identified that in Apr’22, the partners secured a $245 million loan for the project from IDB Invest, a member of the Inter-American Development Bank Group.
Brazil leads the Latin American region in terms of corporate procurement of renewable electricity, accounting for 87% of 2.2 GW of renewable power from wind and solar assets since the start of 2021. The contracted power is deployed towards the decarbonization of industrial operations, with companies such as Hydro, Braskem and EcoPetrol looking to boost their green credentials.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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