WElink Energy Portugal 2, owner of Portugal’s largest solar PV project, enters administration

Power prices have fluctuated considerably in Spain and Portugal this year, with figures from grid operator Redes Energéticas Nacionais (REN) showing that power price fell from US$82.8/MWh in January to a low of US$12.8/MWh in February, before climbing back up to US$81.7/MWh in June; these trends are shown in the graph below, compared to monthly generation from the Iberian grid’s three leading renewable energy technologies.

This has also contributed to a wave of low power purchase agreement (PPA) prices and high curtailment hours, particularly in markets that are more reliant on renewable energy, such as Iberia; REN figures show that renewable energy has accounted for at least 55% of monthly generation in each of the first six months of the year.

More specifically, Solara4 has also endured “multiple fires” in the last year, which, according to UK government documents, have required “increases in remediation and maintenance costs”. The documents also suggest that some of the damage has affected inverters, leading to “extended periods of downtime”, meaning that the project has become more expensive through part repair and replacement, and had its ability to generate electricity and money impeded.

The start of administration proceedings is perhaps a surprise, considering WElink previously announced plans to expand the project. Last April, the company said that it would add 50MW of new solar PV capacity, 264MW of new wind capacity and a 100MW battery energy storage system (BESS) to turn the project into a “comprehensive hybrid energy solution”. The UK government documents note that WElink expected to be in a position to better pay outstanding interest in June 2026 as a result of this transition to a hybrid asset.

EPC contract dispute

WElink also contracted CTIEC, a subsidiary of the China National Building Material Group Corporation, to complete engineering, procurement and construction (EPC) work at the project.

This contract was terminated in May 2023 due to “alleged abandonment of part of the project by CTIEC”, due to being owed a liability of around €143 million (US$166.8 million) by the Solara4 project, according to UK government documents.

However, CTIEC’s EPC contract includes a “wash-off provision,” which can cause this debt to be “automatically and unconditionally” assumed by WElink. The parties involved dispute this debt, and CTIEC filed for arbitration with the Portuguese Chamber of Commerce and Industry (PCCI) in May to resolve this dispute.

Investec and Kommunalkredit have ‘uncertain’ returns on initial investment

While Solara4 was touted as Europe’s largest “subsidy-free” solar project upon the start of construction, this does not mean that its financing was completed without the involvement of external investors.

Specifically, while the project was financed with US$204.2 million in private capital, a further US$116.7 million of senior secured lending was provided by asset manager Investec and Austrian infrastructure investor Kommunalkredit. The UK government report notes that the lenders’ exposure has been reduced from this total to around US$77.7 million, which is listed as having an “uncertain” expected return.

As part of the administration process, Kirsty McMahon and Danny Dartnaill have been appointed joint administrators of WElink Energy Portugal 2, and have already terminated an existing asset management agreement between Solara4 and a WElink subsidiary that was appointed in 2023 to complete outstanding work on the site following the departure of CTIEC.

The joint administrators’ terms are currently set to end on 10 June 2027, but will plan to extend this administration. The UK government document includes the creditors’ voluntary liquidation or the dissolution of WElink Energy Portugal 2 as potential resolutions to this case.