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Spanish groups sign 'largest-of-kind' 660 MW power purchase agreement for solar PV plants

Barcelona — Two Spanish group have signed a largest-of-kind power purchase agreement forsolar-generated electricity from 660 MW of plants yet to be built in Spain andPortugal, the companies said Tuesday.

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As a result, Spain-based Audax will receive around 1.3 GWh/year from theplants that Cox Energy and an unnamed international partner will develop inthe countries by 2020.

According to the groups, 495 MW will be built in Spain and 165 MW in Portugal.

The companies say this is the largest agreement of its kind signed to date forsolar PV production. The companies did not say how long the agreement wouldcover, although Spanish media reports indicated that it is for 20 years.

The deal follows on from the announcement of the first major PPA signed insun-rich Spain earlier this year, between Israel-based Ellomay Capital and anunnamed international energy company, for 10 years of output from its proposed300 MW PV plant in Caceres.

Cox is set to invest Eur400 million ($490 million) in building the capacity,it said. Building will start this year with the capacity coming onlineprogressively through the course of 2020.

And the Spanish PPA could be the first in a succession of similar agreementsbetween the companies, they said, with the two partners looking to developsimilar projects in Italy, France, Germany, Poland and the Netherlands.

In Spain, Audax has received authorization from the regulator for an alliancewith Cordoba-based Unielectrica, which could allow it to become thefourth-largest supplier to small and medium companies in the country.

Cox has a portfolio of 2 GW of renewable projects on standby in Chile, Mexico,Spain and Portugal.

The signing of a PPA will theoretically enable Cox to obtain financing for thePV installations.

According to Spanish daily El Confidencial, US banking group JP Morgan couldtake a controlling stake in the projects, via an investment vehicle Sonnedix.A spokesman for Cox declined to comment, while nobody at JP Morgan wasavailable for comment Wednesday.

The Spanish and Portuguese markets are on the brink of an avalanche inPPA-funded solar projects, spurred by he achievement of grid parity accordingto sector sources.

In Spain alone, 19 GW of plans have been submitted, additional to the 4 GW ofexisting plants and 4 GW of projects awarded at auction last year, accordingto Jose Donoso, president of the country's PV industry lobby group UnionEspanola Fotovoltaica.

According to Jose Maria Gonzalez Moya, general director of the APPA renewablelobby, in the areas of highest natural resources, merchant projects are viableat a market price of Eur40/MWh.

According to the Iberian derivatives bourse, reference prices for the nextfour full calendar year are in backwardation, with fully year 2019 quoted atEur49.05/MWh, but full year 2022 at Eur45.70/MWh.

--Gianluca Baratti, newsdesk@spglobal.com

--Edited by Maurice Geller, maurice.geller@spglobal.com