SunEdison’s financing for its $149.9 million San Andrés solar photovoltaic power project is the first merchant solar project in Chile, and the first fully merchant power project anywhere in Latin America. In fact, it may be the first project financing anywhere for a utility-scale solar plant without an offtake contract or subsidies.

San Andrés SpA

Status

Signed 5 November 2013

Size

$149.9 million

Description

50MW merchant solar photovoltaic power plant, located near Copiapó, in Chile’s Atacama Desert

Sponsor

SunEdison

Equity

$49.8 million

Debt

$62.9 million OPIC loan, $37.5 million IFC loan, $25.6 million equivalent Chilean Peso VAT facility

Lenders

Opic; IFC; Rabobank (VAT)

Sponsor legal counsel

Skadden, Arps, Slate Meagher & Flom (international); Claro & Cia and Arteaga & Gorziglia (Chile)

Lender legal counsel

Chadbourne & Parke (international); Carey & Cia (Chile) Milbank, Tweed, Hadley & McCloy (VAT); Dillon, Bitar, & Luther (COPS placement agent); Reed Smith (account banks)

Environmental Consultant

KAS Engineering

Market consultant

Synex

Independent engineer

Fichtner

Lender insurance adviser

Willis

Model auditor

PwC

Paying agent

Wilmington Trust

OPIC COPS placement agent

Pressprich

Onshore accounts bank

Banco de Chile

Offshore accounts bank

Citibank

The 50MW San Andrés plant benefits from Chile’s persistent shortage of cost-effective generating capacity. It dispatches into the Sistema Interconectado Central, which serves well over 90% of the Chilean population. Chile’s power markets are merchant, though transparent, and richly-priced, so lenders are comfortable with revenue risk.

SunEdison put together the financing for San Andrés alongside that of another project, the 100MW $267 million Amanecer plant. Amanecer has a 20-year contract for differences with CAP Mineria’s Compania Minera Del Pacifico, an iron ore miner. But the two plants have very similar construction and supply contracts, which SunEdison performs in-house, and the same cast of lenders.

The San Andrés debt financing breaks down into a $62.9 million loan from the Overseas Private Investment Corporation (Opic), a $37.5 million loan from the International Finance Corporation (IFC), and a $25.6 million equivalent Chilean Peso VAT facility from Rabobank. The Amanecer financing consists of a $147.5 million Opic loan, a $65 million IFC loan, and a $45 million Rabobank VAT loan.

Amanecer may have had the more straightforward credit profile, but negotiating its PPA proved to be the biggest hurdle to bringing both deals to market. The contract with CAP signed in late January 2013, a little over two months after site development at both projects started.

The sponsor started the financing process in earnest from March 2013, but did not sign on San Andrés until after the Amanecer deal closed in August. It is likely that the smaller merchant deal could have closed faster than the contracted plant.

SunEdison did not have to spend long getting Opic and the IFC comfortable with construction and panel degradation risk, since both lenders had previously worked with the sponsor, in Bulgaria, India and South Africa, before. Rabobank has worked with SunEdison in North America before, and has a presence in Chile, though it competed on price with local lenders.

The VAT facility only exposes the lender to construction risk, so Rabobank did not have to spend long assessing the project’s dispatch profile. But one of the major factors that prolonged the financing process was the unwillingness of the term lenders to share security with the VAT lender.

But conversations with the term lenders tended to focus on the power price curves that sponsors and lenders used, and the ability of the financing to withstand stresses such as a prolonged period of abnormally high rainfall. But with merchant prices, even after a period of softness, hovering around $160-$180 per MWh, lenders have a high degree of confidence in the plant’s underlying economics. The lenders and sponsor signed on the financing on 5 November 2013. The debt funded on 26 November, after Opic issued the certificates of participation that would fund its loan to the plant.