Aela reactivates search for new wind and solar investments

Santiago, August 11, 2017

The Company aims to install 600 MW of wind and solar power in the country

By Jéssica Esturillo O. , Diario Financiero

It took the company almost a year to reach financial close to complete half of its goal in Chile: install 600 MW of wind and solar power.

Yesterday Aela Energía signed an18-year US $410 million project finance agreement with a group of banks including the Inter-American Development Bank and its affiliate Inter-American Investment Corporation; Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corporation, Caixa Bank, Korean Development Bank, and Banco Santander as VAT lender.

Aela Energía’s General Manager Rubens Romano remarked that these funds will cover 70% of the construction of two wind farms in the company’s portfolio, which will be developed simultaneously, initiating works in September.

The remaining capital, to be provided by the company’s shareholders, UK-based Actis and Irish Mainstream, will enable the development of the Sarco and Aurora projects. The former, with a capacity of 170 MW, will be located in Freirina, in the Atacama Region, while the second, with a capacity of 129 MW, will be located in the vicinity of the Llanquihue Lake in Los Lagos.

These facilities have supply contracts in place with distributors, which were awarded in the 2015 tender and came into effect in January of this year, and are currently covered by a hedge contract with an actor of the system, which the executive did not mention for confidentiality purposes.

“I think that this is a good thing because the construction of good projects is important for the country, and that means that banks need to apply thorough criteria when approving loans and they need to be stricte”

Rubens Romano, CEO of Aela Energía

Additional requirements

The executive, who has been at the head of the joint venture for five months, explained that the combination of two elements delayed the financial close.

Last year, when the operation was closing, in addition to the uncertainty and the perception of risk vis-a-vis Donald Trump’s election in the United States, banks applied a stricter stance in their assessment of projects in the country, as a result of changes in market conditions and especially due to falling energy prices.

“I think that this is a good thing because the construction of good projects is important for the country, and that means that banks need to apply thorough criteria when approving loans and they need to be stricter,” he said.

With respect to the future, Romano states that as soon as they have the funds in hand, and within a period of 45 days, they will activate contracts with wind turbine suppliers and the companies that will execute civil and transmission works. They will also activate all social and environmental commitments entered into in the project’s permit.

They aim to start work in September, he said, moving forward simultaneously in the two projects.

And since Aela maintains its development goal, once works commence at the wind farms, the company will resume its search for new projects to complete the remaining 300 MW. This process was suspended while obtaining financing.

“We will now proceed with our growth strategy, and although we were always in contact with the market, we will now look more attentively and in a more active and dedicated manner,” he said.

He added that they will focus on wind and solar initiatives, which ideally have contracts in place, taking advantage of the active market.

In parallel, they are assessing their participation in the next tender for regulated customers, either directly or in association with a project developer.