When the Spanish Government announced in its intention to terminate the existing tariff for solar projects in September 2008, the decision prompted a rush to completion among developers and financiers eager to secure the €0.45 per kW hour tariff.

Many projects succeeded in this endeavour, but the €1 billion Tuin Zonne portfolio - now known as Grupo T-Solar Global - stands alone in size.

The sponsor successfully brought a total of 12 MLAs onboard, which in turn attracted 13 additional banks at syndication despite constrained credit markets.

Installing 127MW photovoltaic solar power capacity in 23 separate projects before the deadline was a mammoth task made more difficult still by the need to negotiate a different licence for almost each and every one of the projects.

IJ reporter Verity Ratcliffe takes a look at the landmark portfolio that was financed and constructed within a year.

The projects

The portfolio consists of 23 projects of around 2 to 3MW in size installed across Spain [Projects Database]. Almost each solar park required a licence sourced from a different town hall. This resulted in the need for a separate due diligence process for each installation in the portfolio.

Further, more than 20 different solar equipment suppliers were used to source panels to complete the project. Three separate technical advisers were appointed to coordinate this process.

Nevertheless, a host of financiers deemed the portfolio appealing in terms of risk profile. The diversification of risks included in the portfolio, achieved through installing a large number of projects that - despite requiring a host of individual licenses - resulted in significant synergies, is likely to have been decisive in this.

The financing

Sponsor T-Solar provided €170 million equity for the project while debt was arranged in the following tranches:

• €700 million senior debt facility with a tenor of 19 years and a 50 per cent cash sweep up to a tenor of 17 years
• €112 million VAT
• €51-66 million unconditional bank guarantee

Financing also accommodated a €488 million interest rate swap (19 year tenor).

Debt was sourced from the following senior lenders:

• BBVA
• La Caixa
• Natixis
• Societe Generale
• Depfa Bank
• Instituto de Crédito Oficial (ICO)
• KBC Bank
• Caja Madrid
• Banco Popular Español
• Banco Espirito Santo
• Banesto
• Caixa BI

The following banks came on board at syndication:

• Intesa San Paolo
• CiC
• Banco Galicia
• Bankinter
• Banco Pastor
• Caixa Galicia
• Caja Navarra
• Bancaja
• EBN
• Caja Segovia
• Unicaja
• Caja Cantabria
• Bancantabria

Uria Menendez represented the sponsor while DLA Piper acted for the lenders.

The following acted as consultants:

• Garrigues (Lender Technical)
• Altermia (Lender Technical)
• Sylcom (Lender Technical)
• Aon Gil y Carvajal (Lender Insurance)
• PricewaterhouseCoopers (Lender Tax/Accounting/Model)
• KPMG (Sponsor Tax/Accounting/Model)

The future

2008 saw intense activity in the Spanish solar market both in terms of financing and construction. Spain will continue to attract projects along its 'solar belt', but likely on a smaller scale or in a different format.

A possible format set for growth is industrial building roof-top installation. Veolia and Clairvoyant Energy partnered to build a 10MW photovoltaic project on General Motor's Zaragoza car manufacturing plant in Spain. The project came online in summer 2008 to secure the €0.45 per kW hour tariff (IJ News, 18 July 2008). Other manufacturing sites in Spain will likely follow suit this year.

However, the traffic of solar projects will inevitably level off to a certain extent now that the €0.45 per kW hour tariff has been replaced by a less appealing incentive. Developers are likely to look east to Italy or Greece for opportunities in the European solar sector where attractive sites are also available and significant government support is on offer.

The project at a glance