Wed. Jul 17th, 2019

The Extremadura sun shines on the Israeli group Ellomay | Economy

The Extremadura sun shines on the Israeli group Ellomay | Economy



The Israeli company Ellomay Capital, which is listed in New York and Tel Aviv, has obtained the necessary financing to move forward the Talasol Polar PV installation. The so-called Talasol project will start what will be the largest photovoltaic park in Spain, by far exceeding the 175 megawatts (MW) of power generated today by the photovoltaic plant of Don Rodrigo, located in Alcalá de Guadaíra, south of Seville. With an output of 300 megawatts (MW), the Talasol park, which will occupy 511 hectares and will be built in the town of Talaván in Caceres, will also become one of the largest in Europe together with the French installation of Cestas, near Bordeaux, which will equal in power.

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"It is a great milestone to have achieved a financing of 177 million euros from the Deutsche Bank and the European Investment Bank (BEI) because it was a necessary step to maintain the objective of starting work this quarter and, if there are no setbacks, to have the operational park next year, "explains Ori Rosenzweig, Ellomay's investment director. It was a surprise to the company that the EIB approved 70 million euros for its subsidiary in Spain, Talasol Solar, and that it would provide them with financing within the framework of the European Fund for Strategic Investments (FEIE) - better known as the Juncker plan - because, according to Rosenzweig, "were unaware that there was the possibility of financing private projects in this area."

Budget

"The total budgeted cost is about 220 million euros. We were in contact with several Spanish banks. The one that showed more interest in the operation was the BBVA, but finally the Deutsche Bank offer was better ", says the Israeli executive, who takes the opportunity to complain about the lack of competition among Spanish banks and that they are still very traditional and slow in its operation.

A group still in red numbers

In addition to Talasol, Ellomay has four other photovoltaic installations in Spain: the Rodríguez I, Rodríguez II and Fuente Librilla parks, located in Murcia, and the Rinconada II plant in Córdoba. The Israeli company, with a large presence in the renewable sector in Italy and Greece, has a capitalization of 92 million dollars. In the first half of 2018 it invoiced 8.15 million dollars and lost 1.13 million, compared to the red numbers of 5.4 million in the same period of 2017.

In February of last year, advised on legal issues by the multinational Baker McKenzie, they finalized the terms of a long-term power purchase agreement - known as Power Purchase Agreements (PPA) -. They signed it in June, for a period of exploitation of 40 years and with October 1, 2020 as the deadline to start commercial operations of an energy that they will sell at a market price. Red Eléctrica will be in charge of connecting the Talaván photovoltaic park to the Cañaveral electrical substation (Cáceres), still to be built.

Thanks to the PPA, Ellomay managed to stabilize the income for the Talasol project, not depend on any subsidy from the government and get into what Rosenzweig calls "the renaissance" of renewables in Spain. "The Juncker plan [plan de inversiones de la UE para infraestructuras] it is not what directs the flowering of renewables at this time nor what motivated us to buy Talasol two years ago. It is an important factor, as a driver, but what is really marking the route of the current rebirth of the sector is to use the PPAs as an alternative to replace government subsidies to that market, which did not work in the past. For us, the new era of renewable energy requires similar agreements, "says the executive.

The photovoltaic park will suppose an economic and social impulse for the zone. From Ellomay estimate that approximately 500 people will be employed during the construction phase and a score of jobs will be fixed. But this is only the beginning. If the expectations of the Israeli company are met, the energy generated by Talasol will go to the future electric substation located in Cañaveral, which, in addition to providing light to the region, is expected to become the main electricity supply line for the line of the AVE that would unite Madrid with Lisbon or, failing that - since the AVE project does not finish to start -, of a high-performance electrified train. "The collaboration of the regional government of Extremadura and the Spanish central has been and continues to be very important. We have made it much easier to reach this point and we know that they work hard to save the last bureaucratic obstacles, "explains the Israeli executive.

Obstacles

And those obstacles that have delayed the signing of the agreement with Red Eléctrica de España to start the construction of the photovoltaic park in Talaván, also go through the Cañaveral substation; an infrastructure managed by the Spanish company and which is essential to provide energy output to the Caceres plant and, therefore, to the development of the Talasol project.

Israeli optimism also rests on the firm conviction that the political swings in Spain will not derail the project. On the contrary, it relies on the determination of the Junta de Extremadura, which is very committed to the regional development that Talasol can provide, and in which the Spanish government's priority is to prioritize the Spanish commitment to meet the 2020 objectives, marked by Europe. These commitments -recovered in the Renewable Energy Plan for the period 2011-2020- establish that, by the end of this year, at least 20% of the energy consumed in Spain must come from renewable sources. "When we bought Talasol, the renewable sector in Spain was in crisis and nobody knew how the market would evolve. We do not have the pressure of the 2020 objectives because the only thing that obligates us is the term included in our PPA [1 de octubre de 2020]. Even so, it is obvious that any scenario to fulfill the European objective that allows us to accelerate the project will be welcome ", concludes Rosenzweig.

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