Lenders extend €1bn for Southern Europe renewable energy project
First-of-its-kind construction facility involves one of the EIB’s largest ever loans.
German asset manager Aquila Capital’s European arm, Aquila Clean Energy EMEA, will develop over 50 solar and onshore wind assets in Spain and Portugal over the next three years as part of a €1bn project.
The financing of the build-to-sell construction facility involves one of the largest loans ever granted by the European Investment Bank, (EIB) the lending arm of the EU. The EIB is providing €400m, while a consortium of commercial banks will offer the remaining €600m.
The scale of the project is significant. Once operational, the solar and wind assets will produce energy sufficient to power 1.4m households (2.6 GW). Total project volume is estimated to exceed €2bn.
For the EIB, the project departs from its historical focus on long-term infrastructure financing.
Ricardo Mourinho Félix, EIB vice-president, said: “This construction facility is the first of its kind and a landmark transaction for the EIB. As the EU climate bank, we put sustainable development at the heart of our activities. We are therefore extremely proud to be financing this project, through a green loan that contributes substantively to Europe’s energy transition and the security of energy supply”.
The EIB’s involvement was also critical from a risk management perspective. The development bank will assume electricity merchant risk, a crucial step given the absence of a power purchase agreement or any alternative price hedge.
Amidst an environment where energy security concerns have taken precedence over transition plans, the project is a positive sign. According to Aquila, the debt was oversubscribed – signalling a resilient investor appetite for large-scale renewable energy assets in Europe.
Susanne Wermter, chief executive officer of Aquila Clean Energy EMEA, said: “We are extremely pleased about being able to secure this landmark financing in a market environment that is marked by high inflation, rising interest rates, supply chain issues and the war in Ukraine.
“This transaction constitutes the largest financing in the history of Aquila Clean Energy and Aquila Capital. It demonstrates the creditability and appeal of our clean energy assets that aim to actively shape the European energy transition.“