Ellomay Capital Announces the Execution of a PPA

Ellomay Capital (NYSEA:ELLO), a renewable energy and power generator and developer of renewable energy and power projects in Europe and Israel announced its wholly owned subsidiary Talasol Solar executed power swap agreement for a period of 10 years.

According to the company, the power swap is in respect of approximately 80 percent of the output of a prospective photovoltaic plant with a peak capacity of 300 MW.

As quoted in the press release:

The PPA was executed with a leading international energy company with a solid investment grade credit rating and a pan-European asset base, which is active in more than 40 countries and has a proven track record in financial hedges.

The power produced by the Talasol Project is expected to be sold by Talasol in the open market for the then current market power price and the PPA hedges the risks associated with fluctuating electricity market prices by allowing Talasol to secure a stable income for the power production included under the PPA. The PPA is based on industry standard documentation published by the International Swaps and Derivatives Association (ISDA), more commonly used to hedge financial interest rate or currency risks, and has been tailored to the Talasol Project. The PPA is structured as a hedge of Talasol Project’s capture price rather than base load price, thus providing an optimal hedge for the Talasol Project’s revenues.

Based on current technical analysis of the design provided by the EPC contractor of the Talasol Project, the P50 expected production of the Talasol Project is approximately 545 GWh per annum. Talasol is expecting that the Talasol Project’s CAPEX will amount to approximately euro 200-230 million, including development costs of approximately euro 20 million and interest of approximately euro 7 million. Based on the current technical analysis, a price projection analysis and the expected hedging effect of the PPA, the Talasol Project’s revenues are currently expected to be in the range of euro 20-25 million per annum. The expected operation expenses are euro 6 million per annum, thus the net operation income, revenues net of operation expenses, is expected to be euro 14-19 million per annum.

The Talasol Project is expected to be financed by a consortium led by Deutsche Bank, which is the mandated lead arranger, and the European Investment Bank (EIB). The expected leverage level is in the range of 50-60% of the total investment. Financial closing is expected before the end of 2018 and commencement of operations is expected in the first half of 2020.

Click here for the full press release.