Indonesian renewables developer Terregra Renewables and private sector infrastructure fund manager Infradebt have announced the close of a $7 million senior debt facility for the Mobilong and Moyhall solar farms. Both projects are 5 MW utility-scale solar facilities located in South Australia.
The Mobilong Solar Farm was switched on last week as the first in a series of five megawatt solar farms the developer plans to deliver across Australia. The $8.5 project north of Murray Brigge features around 15,600 Yingli modules, two SMA containerized inverters and Arctech trackers. Construction on Terregra’s second project, the Moyhall Solar Farm, is expected to commence shortly. Balance Utility Solutions is the EPC contractor for both projects.
“It’s great to have senior debt finance in place for Mobilong and Moyhall,” said Graham Pearson, Director of Terregra Renewables. “Mobilong was commissioned last week and is already selling renewable energy into the SA grid. Construction at Moyhall is due to commence shortly, with first generation due in early 2020.”
As it commissioned its first Australian project, Terregra revealed the Mobilong Solar Farm will run on a fully merchant offtake arrangement. The Indonesian developer has the same plans for the rest of its 30+ MWac portfolio of 5 MWac solar farms across Australia. “Our intention is to operate all of our projects on a merchant basis for at least the medium term,” Pearson tells pv magazine Australia.
For Terregra and a growing number of players in the Australian market, such as China’s Risen, UK’s Eco Energy World, and collapsed Western Australia’s Carnegie Clean Energy, the economics are compelling to go pure merchant. The trend echoes a global shift from the security of power purchase agreements towards selling power on the spot market.
“Our modeling shows a significant uplift in project returns (IRR) for a merchant project compared to the same project having a PPA at the current market rate and this is especially the case in the next few years when the average spot price is projected to be significantly higher than PPA prices,” Pearson said. “Terregra is comfortable with this approach and we’re excited to partner with Infradebt which supports this philosophy. We look forward to continuing to build our portfolio of Australian projects in partnership with Infradebt.”
The loan to Terregra marks the thirteenth investment for the Infradebt Ethical Fund (IEF) since its first close in September 2017. The debt investment fund was established with a $50 million cornerstone commitment from Future Super and plans to specialize in providing debt security to solar and wind projects developed on the merchant basis.
“We are pleased to have executed on IEF’s strategy over the year and assembled a diverse portfolio for IEF. The portfolio is well positioned – with attractive returns and well diversified by project, technology and offtake,” said Alexander Austin, Infradebt CEO. In some of its earlier transactions, Infradebt refinanced Epuron’s Northern Territory solar portfolio and underpinned Impact Investment Group’s merchant portfolio, including 20 MW Chinchila Solar Farm and 34 MW Brigalow Solar Farm in Queensland and the 19 MW Swan Hill Solar Farm in Victoria.
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