Spain: EPC contract signed for 300 MW subsidy-free PV plant

Metka, a subsidiary of Athens-headquartered Mytilineos, yesterday signed a €192.5 million contract in Athens with Talasol Solar S.L., owned by Ellomay Capital Ltd, to undertake the EPC work for one of Spain’s largest unsubsidized solar PV projects, the so-called Talasol Project.

The project will be located in the municipality of Talaván, near Cáceres, in the southern region of Extremadura.

In a statement released, Metka said that apart from the EPC work, the scope of the collaboration includes “the ancillary facilities for injecting power into the grid, including a 400 kV step-up substation, the high voltage interconnection line to the point of connection to the grid and performance of two years of operation and maintenance (O&M) services.”

A spokesperson for Metka additionally told pv magazine that the company “hopes the construction will start in the fourth quarter of 2018 and the project duration will be 16 months.”

Earlier in January, Israel’s Ellomay Capital Ltd said that depending on the EPC cost, it expected that “the Talasol Project's CAPEX will amount to approximately €200 million, including development costs of approximately €20 million and interest of approximately €7 million.”

Financing

When asked about project financing, Metka preferred not to provide any details, stating that “since we are the EPC, it [financing] is handled by the owner.”

pv magazine, however, previously reported that Ellomay had entered into an agreement with Germany’s Deutsche Bank for the structuring of non-recourse senior debt financing for the project, with the possibility that the European Investment Bank (EIB) will also inject financing into the Talasol project.

In January, Ellomay said that “the power produced by the Talasol Project is expected to be sold by Talasol to the open market for the then current market power price.” It added that it has secured a binding term sheet with an undisclosed international hedge provider, which effectively hedges the PV farm’s power purchase agreement (PPA) against price fluctuations.

Thus, should the wholesale market electricity price go “below a price underpinned by the PPA, the Hedging Provider will pay Talasol the difference between the market price and the underpinned price, and if the market price is above the underpinned price, Talasol will pay the Hedging Provider the difference between the market price and the underpinned price,” said Ellomay Capital.

The hedged production under the PPA is currently expected to be between 3,500 to 3,700 GWh during a fixed term of 10 years, commencing shortly after commercial operation of the Talasol project commences.

Signalling a new era

The defining characteristic of this project is that is subsidy-free, signaling a new era for renewable energy development in Spain. This sentiment was underlined at Genera 2018, which was held June 13 to 15 in Madrid, Spain. Among the four key solar takeaways from the event was the feeling that the renewed activity in Spain’s large-scale sector is helping to reanimate the country’s solar industry.

Indeed, with around 3.9 GW of allocated solar power in last year’s auction – all of which is due to come online by the end of next year – and more than 800 MW of solar parks that have already secured a private PPA, Spain is on track to once again become Europe’s largest market, in 2019. “Already this year we may see the first unsubsidized solar parks being connected to the grid, as a result of continuing activity in the private PPA segment,” UNEF president Donoso told pv magazine at Genera.