Eight Rivers Energy Company Limited (EREC), a solar power developer, is fine tuning its power purchase agreement (PPA) with Jamaica Public Service Limited (JPS) before issuing a request for proposals (RFP) from EPC firms and locking in the debt component of its project finance, partner and Managing Director Angella Rainford said.
A JV held by Rainford’s UK-based Rekamniar Frontier Ventures and Paris-based Neoen SAS, EREC was awarded a 37MW renewable energy tender issued by Jamaican regulator, Office of Utilities Regulation (OUR) in May 2016 at a feed-in rate of USD 0.0854 per kWh, the lowest to date in the country. The cost of capital and the developer’s ability to lever the project, along with a significant drop in equipment costs, allowed EREC to bid at such a competitive rate, Rainford said, noting the USD 50m project would have cost at least twice as much to build just a few years earlier.
EREC is building to a gross capacity of 49.5MW, at a cost of about USD 1m per MW, Rainford said, noting the efficiency of the modules, the technology and yield had improved tremendously since the partners began exploring the project in 2012 when OUR originally announced it would tender up to 115MW of renewable energy. The capacity EREC was awarded was the last tranche, following the award of 78MW to solar and wind developers WRB Energy and Blue Mountain Renewables (BMR) respectively.
EREC is finalizing the details of its PPA with Jamaica’s power distribution monopoly JPS by November, before launching an RFP for the EPC work by late 3Q16 or early 4Q16 and closing financing by mid-2017, Rainford said. Eight Rivers will invite pre-qualified EPC bidders to respond and then evaluate each based on a list of criteria, including balance sheet, warranties, and project references, she noted. Neoen’s engineer will help draft and issue the RFP, Rainford said. She noted Neoen has an EPC arm, but that the selection process would be carried out competitively. Spain-based turnkey solar project developer Sofos Energy, which has participated in several other photovoltaic (PV) projects in Jamaica and around the Caribbean, will likely be among the EPC firms invited to bid, she said.
The project developers are seeking 75% to 80% debt finance and are in discussions with international, regional, and multilateral lenders, including the Inter-American Development Bank (IDB) and the International Finance Corporation (IFC). The equity partners have a long-term hold strategy with no defined timeline for an exit, Rainford said.
Eight Rivers partners have yet to determine whether they will allow the EPC to source the panels and inverters required for the 50MW solar farm, or whether the equipment will be sourced directly by the equity partners. More than likely, the developers will allow the EPC to take responsibility for sourcing the equipment and ensuring its integrity, Rainford said. “My view is that we’ll have a single point; single point risk, single point accountability,” she said.
The construction period is projected to last nine to 10 months, but the developer is budgeting a year conservatively, Rainford said, noting the project is expected to be online by the end of 2018.
Neoen is a Paris-based renewable energy company founded in 2008 with 750MW of assets, between those in operation and under construction. Neoen ia backed by Paris-based family office Omnes Capital and sovereign wealth fund Bpifrance, the latter acquiring a 15.4% stake in 2014.
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