Shams 1: Sun strokes


As a hydrocarbon-rich Emirate, Abu Dhabi has taken several bold steps to reduce its reliance on fossil fuels. Alongside its nuclear program, one of its most eye-catching initiatives has been to target 7% renewable generation by 2020. To this end, Shams 1 is a big step forward.

Shams 1, located in Madinat Zayed, around 120 km south-west of Abu Dhabi, will be the largest concentrated solar power plant in the world, extending over an area of 2.5 km, with a capacity of approximately 100MW and a solar field consisting of 768 parabolic trough collectors supplied by Abengoa Solar.  

Abu Dhabi’s renewable and alternative energy company, Masdar, selected private partners Total and Abengoa Solar to develop and operate Shams 1 concentrated solar project after a competitive bidding process. The process was built on ADWEA’s successful IWPP and IPP model.

Ten banks have committed to the financing of the $1 billion project. Banks committed to the deal late November 2010, with a 160-page term sheet appended to the commitment letters. The banks comprise BNP Paribas (also financial adviser and offshore accounts bank), Societe Generale (technical and agent bank), Natixis (documentation), National Bank of Abu Dhabi (onshore accounts bank), BTMU, KfW, Mizuho, SMBC, WestLB and Union National Bank.

The debt financing comprises a $600 million 22-year term loan plus a $35 million standby facility. Pricing is 200bp in construction; dropping to 190bp in operation rising in three 30bp steps to 280bp. Upfront fees are between 160bp to 200bp.

Financial close is expected in mid-February and construction is expected to take two years. Abu Dhabi Water and Electricity Company (ADWEC) will be offtaker for the power under a 25-year power purchase agreement. ADWEC is a wholly owned subsidiary of ADWEA. There is also a green payment subsidy that is paid directly by the Abu Dhabi government. The project company will raise invoices and ADWEC will pay its portion of the tariff and forward the invoice to the government, which will pay the subsidy component.

The 25-year build-own-operate (BOO) project will be the largest parabolic trough power station in the world and will use a MAN turbo steam turbine.

The project is registered as a project under the United Nations’ Clean Development Mechanism (CDM) and is eligible for carbon credits. It is be the first CSP plant registered under the CDM and the second project registered for Masdar. The plant will displace around 175,000 tonnes of CO2 per year, equivalent to planting 1.5 million trees or removing 15,000 cars from Abu Dhabi’s roads.

Status: Banks signed commitment letters at the end of November 2011; financial close expected mid-February
Description: Financing for a 100MW concentrated solar power plant
Sponsors: Masdar (60%), Total (20%), Abengoa (20%)
Financial adviser: BNP Paribas
Mandated lead arrangers: BNP Paribas, Société Générale, Natixis, National Bank of Abu Dhabi, Bank of Tokyo-Mitsubishi UFJ, KfW-IPEX Bank, Mizuho, Sumitomo Mitsui Banking Corporation, WestLB, Union National Bank
Sponsor legal counsel: Allen & Overy
Lender legal counsel: White & Case
Lender technical adviser: Mott MacDonald
Lender insurance adviser: Willis
EPC contractor: Abengoa Solar