An international arbitration tribunal has issued a decision that two NextEra Energy Inc. subsidiaries, NextEra Energy Global Holdings BV and NextEra Energy Spain Holdings BV, are entitled to damages related to the return on the capitalized costs of investments in two 49.9-MW concentrated solar power plants in the Spanish region of Extremadura.
NextEra initiated the arbitration in 2014 after the Spanish government abolished the long-term premium and tariff system that was the basis for NextEra's investments in the two projects.
According to a filing, the arbitration tribunal upheld in a March 12 decision NextEra's primary arguments related to liability, concluding that Spain did not comply with its obligation under the 1994 Energy Charter Treaty to provide fair and equitable treatment, and failed to protect NextEra's expectations, upon which it based investment decisions regarding the development of the plants.
The NextEra subsidiaries are entitled to damages estimated at approximately €291 million, or $329 million. That amount is based on a return on the capitalized costs of investments in the plants as of June 30, 2016, on the basis of the plants' weighted average cost of capital plus a premium of 200 basis points, plus pre- and post-judgment interest based on the five-year Spanish sovereign bond rate.