Talasol - Spain PV (300 MW)
Talasol is promoting the construction of a photovoltaic plant with a peak capacity of 300 MW in the municipality of Talaván, Cáceres, Spain (the “Talasol Project”). Ellomay acquired Talasol’s shares in April 2017 for an aggregate consideration of Euro 10 million (with Euro 2 million held in escrow).
In April 2019 Ellomay sold an aggregate of 49% of the outstanding shares of Talasol for an aggregate purchase price of approximately Euro 16.1 million. Accordingly, Ellomay owns 51% of Talasol.
During June 2018, Talasol entered into an engineering, procurement & construction agreement (the “EPC Agreement”) with METKA EGN Limited (“METKA EGN”). The EPC Agreement provides a fixed and lump-sum amount of Euro 192.5 million for the complete execution and performance of the works defined in the EPC Agreement. The works include the engineering, procurement and construction of the Talasol Project and the ancillary facilities for injecting power into the grid, including a 400 kV step-up substation, the high voltage interconnection line to the point of connection to the grid and performance of two years of O&M services. METKA EGN is expected to complete the works under the EPC Agreement in Q3 2020.
In June 2018, Talasol executed a financial power swap in respect of approximately 80% of the output of a prospective photovoltaic plant for a period of 10 years (the “PPA”). The PPA was executed with a leading international energy company with a solid investment grade credit rating and a pan-European asset base, which is active in more than 40 countries and has a proven track record in financial hedges. The power produced by the Talasol Project is expected to be sold in 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.
In December 2018, Talasol entered into a set of agreements governing the procurement of financing for the development and construction of the Talasol Project in the aggregate amount of approximately Euro 177 million (the “Project Finance”). The Project Finance is led by Deutsche Bank, which is the mandated lead arranger, and the European Investment Bank (EIB). . The Talasol Project reached financial closing on April 30, 2019.
Based on current technical analysis of the design provided by the EPC contractor of the Talasol Project, the P50 expected production of the Talasol Project is approximately 561 GWh per annum. It is expected that the Talasol Project’s CAPEX will amount to approximately Euro 200-230 million, including development costs of approximately Euro 20 million and interest of approximately Euro 7 million. Based on the current technical analysis, a price projection analysis and the expected hedging effect of the PPA, the Talasol Project’s revenues are currently expected to be in the range of Euro 23-25 million per annum. The expected operation expenses are Euro 6 million per annum, thus the net operation income, revenues net of operation expenses, is expected to be Euro 17-19 million.
Location: Municipality of Talaván, Cáceres, Spain
Pumped-Storage Development Project - Manara Cliff, Israel (156 MW)
Pumped storage is a form of renewable energy based on hydropower. A pumped storage power plant is capable of generating electric energy on demand, and is one of the oldest technologies used for energy storage. The technology has been in use for more than 100 years, providing over 100,000 MW around the world.
The technology allows storing available energy for later use. The pumped storage technology stores energy during low demand periods and releases it during peak demand periods, thereby utilizing the gap in production costs in order to stabilize the grid’s voltage and regulation.
A pumped storage plant is a hydro-storage system comprised of upper and lower water reservoirs, connected by an underground water pressure pipe: during low demand – pumping water from the lower reservoir for energy storage, and during peak demand – releasing water from the upper reservoir for energy production. The technology utilizes excess manufacturing ability during low demand hours in order to increase supply during peak demand hours, thus providing available reserve to be used by the grid dispatcher during peak and low demand periods.
Pumped storage also allows optimal grid stability functionality by providing a combination of low latency, high power and high energy response (~90 sec).
Ellomay owns 75% of the companies involved in the development of the pumped-storage plant in the Manara Cliff, located in Northern Israel, south of the town of Kiryat-Shmona, with a capacity of 156 MW. According to the current construction plans of the pumped storage project, the plant will be based on water reservoirs built on agricultural land. The upper water reservoir will be located near Kibbutz Manara and the lower water reservoir will be based on an existing reservoir near Kiryat-Shmona.
Ellomay Manara entered into land lease option agreements with land owners, in order to secure land use rights for the duration of the construction phase and the commercial operation of the plant, and a water supply agreement with the Galil Elyon Water Association, in order to secure water supply for the project for the duration of the commercial operation.
Ellomay also performed geological and hydrology surveys, and an environmental impact assessment.
The financial closing of the Manara Project is subject to the availability of a quota for pumped storage plants and the general quota set forth by the Israeli Electricity Authority for pumped-storage projects in Israel is currently set at 800 MW, while conditional licenses issued are in excess of such quota.