FRV taps Australian banks to finance 20MW solar project

Spanish renewable energy developer FRV hopes to reach financial close on its 20MW solar PV project near Canberra after awarding the mandate to two Australian banks last week.

FRV project manager Fernando Salinas said the two Australian banks were chosen to finance the Royalla solar farm, to be located around 23kms from the Australian capital, following negotiations with 8 local and foreign banks negotiating with 8 banks.

The 20MW installation will be Australia’s largest –in fact only its second utility scale solar installation after the 10MW Greenough River solar plant that was opened in WA last year. That plant, however, was financed through equity contributions from GE and Verve Energy, so Royalla will be the first large scale solar plant to be financed by Australian banks.

Salinas said the financing will be on a non-recourse basis, and the Australian banks were chosen for their experience in infrastructure finance. He said the involvement of Australian institutions would help the utility scale solar industry in Australia.

Royalla is being built under the ACT government’s Big Solar program, which will give it a guaranteed payment over 20 years. FRV won a reverse auction with a bid of $186/MWh, which is not indexed for inflation. ACT will pay the difference between the wholesale rate and the agreed tariff through a “contract for difference.”

Salinas said the project should start construction in the September or December quarter and be completed by June, 2014.

FRV also revealed that it has opened up an office in Perth, to look at potential projects in Western Australia, which has an interesting combination of excellent solar resources, an expensive wholesale market, and a system of capacity payments. Other developers such as Investec are also looking at W.A. with keen interest, despite its newly appointed energy minister Mike Nahan having an unfavourable attitude to renewables.

FRV was also the lead developer of the 150MW Moree solar project, which obtained an Australian government grant under the Solar Flagships program, but then lost it because it was unable to obtain a power purchase agreement and banking finance.

Plans for that project have now been revised down to 70MW, and have been resubmitted to the Australian Renewable Energy Agency for a possible grant, or even an agreed tariff, along with another losing flagships finalist Infigen Energy, which proposes a 35MW solar plant to be cited near its Capital wind farm.