Financing for Abu Dhabi’s Shams 1 solar power project has attracted 10 banks and now looks set to reach financial close in January 2011.

The following banks are to lend on the $740m project, of which about $600m will be debt finance:

• Societe Generale (France)
• BNP Paribas (France)
• Natixis (France)
• Mizuho (Japan)
• Bank of Tokyo-Mitsubishi (Japan)
• Sumitomo (Japan)
• WestLB (Germany)
• KfW (Germany)
• National Bank of Abu Dhabi (UAE)
• Union National Bank (UAE)

Debt is set to carry a 20-year tenor and sources close to the deal has suggested that pricing is very competitive. While the project was until recently scheduled to reach financial close before the end of 2010, the developers have since adjusted the plan to early 2011.

About 16 banks originally considered financing the project. The high level of interest may be the result of several factors. As Abu Dhabi’s first thermal solar power project, banks are eager to finance the scheme, which is set to be followed by similar projects in the future.

Also, Masdar’s strong relationship status is said to have played a key role. But it is the government’s willingness to shoulder risk associated with the project that is seen as particularly attractive for banks.

According to one banker, the “offtake risk is very low” as there is a 25-year power purchase agreement (PPA) in place. Furthermore, almost all of the debt will be guaranteed by the government. As a result, “pricing is very competitive”.

The 100 megawatt (MW) scheme will be developed by Spain’s Abengoa and France’s Total following Masdar’s decision to appoint them in June.

France’s BNP Paribas is acting as financial adviser on the project. UK firm Linklaters is advising Abengoa and Total.

Masdar declined to comment.