Latin America: Mainstream negotiates debt for first Chilean renewable portfolio

08 May 2018 - 12:00 am UTC

Mainstream Renewable Power is seeking approximately USD 540m in non-recourse debt to fund the construction of the first of three portfolios in Chile.

A source familiar told Inframation that the first portfolio contains four projects – three wind farms and one solar park – with a combined capacity of 554MW. The sponsor aims to fund construction raising debt worth up to 80% of the required investment, the source added.

The portfolio includes the 185MW Cerro Tigre and 155MW Tchamma wind farms in the northern Antofagasta Region, the 84MW Alena wind project in the central Biobío Region and the 130MW Escondido solar park in the northern Atacama Region.

Five sources briefed said the Irish developer is negotiating terms with several lenders, but has yet to select a group of banks to work on a long-term credit facility.

The loan will be backed by three 20-year power-purchase-agreements (PPA) won by Mainstream in Chile’s 2016 energy auction.

The technological and geographical diversification of assets in the portfolio is helping to draw lenders’ interest, some sources said. By combining solar and wind as energy sources, and including projects in different regions of the country, the sponsor is improving the portfolio risk profile and minimizing the odds of having to buy energy in the spot market to fulfill contractual commitments.

In Chile, the 2016 energy auction was highly competitive, resulting in average prices of USD 47.6 per MWh. Developers have to supply electricity to the grid starting in January 2021, but if they fall short of the amount of power contracted, they will have to buy it at the spot market price.

As result of the tender, Mainstream Renewable Power signed contracts with the National Energy Commission (CNE) to build and operate seven wind energy plants with a combined capacity of 986MW and an estimated investment of USD 1.65bn.

At the end of 2017, the sponsor sent to potential lenders three preliminary portfolios containing ten projects, including three solar parks in addition to the seven wind farms.  

Mainstream holds a 40% stake in the joint venture Aela Energía, which last year closed a USD 434m credit package with six lenders to finance the construction of two wind projects and the refinancing of a third operational wind farm, according to Inframation DealsActis controls 60% of shares in Aela.