Wind developers persevere in Argentina

Developers have brought a handful of wind projects in Argentina to financial close in recent months, having turned to development finance institutions and export credit agency wraps amid a lack of enthusiasm from commercial banks.

Given Argentina's economic situation and the recent change in government, with Peronist Alberto Fernández being sworn in as president in December (2018), project finance bankers at commercial lenders in New York say they will not be willing to invest in the country in the near future.

This limits the options of the many developers that have secured power purchase agreements (PPAs) for projects in the country’s RenovAr programme in recent years, but has not stopped financing activity altogether, even after the election.

Last summer, German development bank KfW financed a 141MW wind portfolio developed by Genneia in Patagonia, and in September – shortly before the October election that was won by Fernández – the US International Development Finance Corp (DFC, formerly the Overseas Private Investment Corp) approved $230 million in loans for two AES Corp wind farms in the country.

Since the October election, financing activity has continued, with YPF Luz and Genneia both recently bringing wind projects to financial close.

Cañadón León

YPF Luz – a joint venture between local energy company YPF and turbine supplier General Electric – has signed a $150 million financing for its 120MW Cañadón León wind farm in Santa Cruz.

The debt is split into two tranches:

  • $100 million loan from BNP Paribas Fortis, guaranteed by German export credit agency Euler Hermes
  • $50 million loan from the DFC

The Cañadón León project won a 20-year PPA for 99MW of its output with Cammesa in round 2 of RenovAr in 2018 and will sell its remaining generation to YPF for 15 years.

YPF Luz has also found an equity investor for the project in the shape of Equinor. The Norwegian energy company has agreed to buy a 50% stake for $30 million.

Vientos de Necochea

The latest Genneia deal, meanwhile, is a $51 million loan from Dutch development bank FMO for the 38MW Vientos de Necochea wind project in Necochea, Buenos Aires province.

Genneia co-owns the project with state-run power company Centrales de la Costa Atlántica. It was awarded a 20-year PPA with Cammesa during round 1.5 of RenovAr.

The 15-year loan from FMO is guaranteed by Danish credit export agency EKF. The ECA wrap is justified in this case by the use of Danish turbines, supplied by Vestas.

FMO made the first disbursement under the loan on 15 January (2020).

There is still work to be done to get some projects over the finish line, however. Some projects awarded contracts in RenovAr Round 2 have not yet reached financial close, such as Empresa Provincial de Energía de Córdoba's 40MW Arroyo Cabral solar park in Córdoba.

(A version of this story first appeared on Power, Finance & Risk)

Asset SnapshotCanadon Leon Wind Farm (120MW)

Value:
USD 160.00m
Full Details

Transaction SnapshotCanadon Leon Wind Farm (120MW)

Financial Close:
16/01/2020
Value:
$160.00m USD
Equity:
$10.00m
Debt:
$150.00m
Debt/Equity Ratio:
94:6
Full Details