A cross-border team of lawyers from Baker McKenzie advised Ellomay Capital on the execution of a power purchase hedge agreement (PPA) for its 300-MWp Talasol solar photovoltaic project in Spain. The 10 year contract is the first of its kind in Spain and was executed with a leading international energy company with a solid investment grade credit rating and a pan-European asset base.
Ellomay is an Israeli based company whose shares are registered with the NYSE American and with the Tel Aviv Stock Exchange. Since 2009, it has focused its business in the renewable energy and power sectors in Europe and Israel.
The power produced by the Talasol Project is expected to be sold by Talasol to 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 estimated cost of the project ranges from EUR 200 million to EUR 230 million, including development costs of about EUR 20 million. The scheme will be financed by a group led by Deutsche Bank and the European Investment Bank (EIB). Talasol calculates that the plant will generate revenues of between EUR 20 million and EUR 25 million a year.
Baker McKenzie advised Ellomay on the PPA with a team led by London-based Partner Marc Fèvre and including Counsel Phung Pham, and Senior Associate Graham Richmond. The Firm is continuing to advise Ellomay on all other aspects of the project with a team led by Partner Luis Casals in Madrid.
Marc Fèvre said,
"The Talasol project is a landmark renewables transaction. Not only is it the largest solar project under development in Spain, it does not benefit from any subsidies, which shows the maturity of the renewables sector. The PPA is the first of its kind in the Spanish market and Baker McKenzie is delighted to have brought a cross-disciplinary and multijurisdictional team to assist Ellomay Capital in achieving this important landmark".
Ori Rosenzweig, Chief Investment Officer at Ellomay Capital said: "The execution of the PPA is an important milestone for Talasol, which we believe to be one of the most interesting projects today in Europe. Our key focus in the project is its team, as we believe that in order to be pioneers and overcome the challenges of this innovative project, you need to have the right people on board. In this sense we feel fortunate and grateful, as the results speak for themselves".
Talasol expects to achieve financial close by the end of the year and start commercial operations at the site in the first half of 2020.