Renewable Energy Finance: Fotowatio Renewable Ventures (FRV) secures $368mn for the development of a 477 MW Carmonita Ministerio PV solar cluster in Spain

The agreement represents the largest debt financing announced in 2023 in Europe.

The financing was secured from a consortium of banks comprising Santander, MUFG, ING, KfW Development Bank, and Natixis. The complex, located in the province of Extremadura, will produce ~983 GWh/yr. FRV mentions that the project’s revenue will be guaranteed by a long-term power purchase agreement (PPA), however, the company has not specified if the PPA is signed with corporate customers or utilities. The project is expected to reach commercial operation by the end of 2023. 

The Carmonita Ministerio cluster will be developed as part of the 762 MW Carmonita node supercluster. The supercluster also includes Carmonita Norte and Carmonita Sur PV clusters. With the current financing, Carmonita Ministerio will represent FRV’s fifth project in Extremadura and adds to the company’s ambitions to double its installed capacity under management to ~5 GW by 2025.

Recent challenges in Europe’s financial markets have impeded developers’ ability to raise non-recourse project debt. One of the major challenges is the continuous interest rate hikes by the European Central Bank (ECB) - including the recent 0.5% rise - aimed at bringing down inflation from 8.5% currently to 2% in the medium term. Additionally, supply chain bottlenecks and volatile power prices, coupled with lengthy permitting processes, are further reducing financiers’ appetite to back capital-intensive, renewable energy projects. RWE CEO Markus Krebber highlighted this issue recently, stating that “current projects [in Europe] outnumbered western supply chain capacity 3-5 times, while there are long lead times to add additional capacity”. Despite these constraints, Enerdatics observes that of the $2.1bn in project-level debt raised in the solar PV sector in Europe in Q1 2023, more than 50% was for assets in Spain. The country has the highest solar yields in the EU and good availability of land, augmented by stable power prices, which helps developers lock in long-term power purchase agreements (PPAs). The stability in prices is attributed to domestic regulations, which cap the price of gas used in power generation. Additionally, the Spanish government implemented new planning rules in 2022 that shorten the permitting process for projects of capacity below 150 MW. The new rules, which are effective until 2024, could halve the time required to secure permits.

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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