Financing for Shams 1, a 100MW thermal solar project in Abu Dhabi’s Masdar City, has closed.
A total of 10 banks signed financing agreements on 3 March. The funding is made up of 80 per cent debt and 20 per cent equity.
The project’s sponsors, Spain’s Abengoa and France’s Total, have supplied around $153m in equity, while the following commercial banks have together put forward $615m. The approximate contributions are:
- Bank of Tokyo-Mitsubishi (Japan) – $68m
- KfW (Germany) – $68m
- National Bank of Abu Dhabi (UAE) – $68m
- Natixis (France) – $68m
- Societe Generale (France) – $68m
- Sumitomo (Japan) – $68m
- WestLB (Germany) – $68m
- BNP Paribas (France) – $54m
- Mizuho (Japan) – $41m
- Union National Bank (UAE) – $41m
The deal was oversubscribed. The banks with final allocations of $68m each originally offered around $100m. BNP Paribas offered $80m and Mizuho and Union National Bank offered $60m each. Several other banks put in offers that were rejected as the project was already oversubscribed.
Tenor on the debt stands at 22 years. Pricing is higher during the two-year construction period before dropping and then rising again after five years.
According to one banker, the “offtake risk is very low” as there is a 25-year power purchase agreement (PPA) in place. Further, almost all of the debt is guaranteed by the government. As a result “pricing is very competitive”.
As Abu Dhabi’s first thermal solar power project, many banks were eager to finance the scheme, which is set to be followed by similar projects in the future. Finally, Masdar’s strong relationship status is said to have played a key role.
France’s BNP Paribas is acting as financial adviser on the project. UK firm Linklaters is advising Abengoa and Total. US law firm White & Case acted for the lenders.
The project includes a small natural gas element. According to sources close to the project, the Shams 1 facility will use roughly the same amount of gas in one year as a traditional gas-fired power plant would in three to four days.
The facility is set to be followed by additional solar facilities in the emirate. Abu Dhabi’s next solar project to be tendered will use photovoltaic solar technology and will be built at Noor. It will also have a capacity of 100MW.