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One of Spain’s largest banks has gotten behind a utility-scale solar portfolio, planned without support from auctions nor power purchase agreements (PPAs).

Banco Sabadell, a financier sitting on some €222 billion (around US$250 billion) in total assets last year, has agreed to back a 79.2MW PV pipeline Renovalia is planning in the Ciudad Real province.

The bank will supply a €29.7 million (around US$32 million) senior credit to finance construction of the five-plant solar cluster, planned near the city of Puertollano.

Contacted by PV Tech today, a source with knowledge of the transaction said the debt-to-equity ratio will lie around the 75%-to-25% mark.

The 79.2MW portfolio will in principle be developed without a PPA, directly selling its power output to the market on a merchant basis.

Law firm J&A Garrigues advised Renovalia Energy during the financing talks, while lawyers at energy, real estate and transport specialist Watson Farley & Williams counselled Banco Sabadell.

The transaction looks set to further boost Spain’s credentials as a European hotspot for zero-subsidy solar, drawing anew the eyes of foreign developers after years of policy uncertainty.

Unsubsidised activity to date has centred around PPA-driven moves, including deals by Statkraft (270MW) BayWa r.e. (175MW), Luxcara (121MW), aventron (50MW) and potential forays by Solaria.

As the utility-scale pipeline gathers steam, so do concerns around how players will navigate merchant risks, set to kick in as increasingly shorter PPAs expire.

At an Intersolar 2019 session attended by PV Tech, Sean Maguire, commercial VP for European PV and wind at Statkraft, explained his firm is amongst those eyeing greater merchant exposure.

“Will merchant solar become the norm? We don’t believe so,” he commented. “But as portfolios grow and subsidies start to fall away, funds and investors may start to look into owning around 20-30% of their portfolios on a merchant basis.”

Tags: subsidy-free solar, subsidy-free pv, zero-subsidy solar, unsubsidised, spain, europe, southern europe, merchant, merchant risks, merchant solar, renovalia, renovalia energy

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The business of solar is changing, as the industry scales up, technology, IT and new players to the market will add complexity. This sparks a host of opportunities such as co-location of solar and storage and the rise of unsubsidised solar projects as well as challenges which will question the very business model of European solar asset owners. Solar Finance & Investment Europe is the meeting place for institutional investors, sovereign wealth funds, solar, wind and storage funds and large energy buyers to do business.

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