Scatec, a leading renewable energy company, has finalized a significant 15-year power purchase agreement (PPA) with BTG Pactual Comercializadora de Energía for a solar power project in Colombia. This agreement represents an important achievement for Scatec. Importantly, this would enable the company to expand the company’s operations into the Colombian market, where conditions for investing in renewable energy are extremely favorable.
In addition to developing the project, Scatec will serve as engineering, procurement and construction (EPC) contractor. The solar project will have a size of 130 megawatts (MW). The PPA will guarantee roughly 85% of its projected production. SPPIC’s solar plant will have a total estimated capital expenditure (capex) of $110 million. Scatec will oversee about 80% of this spend.
Financing and Ownership Structure
To pay for the project, Scatec is in negotiations with Financial Institutions for a nonrecourse project financing. As a result, the company has set a long-term target leverage ratio of 65%. Achieving this goal will better enable it to responsibly make investments at scale while mitigating risk.
Along with Scatec’s majority ownership of the project, Norfund will join as a minority equity partner. We intend to fund the project through a combination of nonrecourse financing and equity capital from the public and private partners. This tactic ensures that the initiative’s financial structure is watertight.
Our current project schedule indicates that we plan to reach financial closure this year. Construction is expected to start in that same timeframe as well.
Advantages of the Colombian Energy Market
Colombia has a rosy outlook when it comes to renewable energy advancement. The promise is furthered by its abundant solar irradiation and increasing need for sustainable energy sources. The regulatory framework in Colombia is conducive to renewable investments, making it an attractive destination for companies like Scatec.
“Colombia offers a solid framework for renewable energy investments, and we are pleased to contribute to the country’s energy transition through our integrated business model.” – Scatec CEO Terje Pilskog
Now it’s Scatec’s turn to embark on this exciting adventure. It seeks to leverage these favorable conditions to establish a solid foothold in the Colombian energy market.
Commitment to Renewable Energy
This project, achieved in cooperation with BTG Pactual Comercializadora de Energía, underscores Scatec’s dedication to developing innovative renewable energy solutions. The firm’s mission is to produce projects that achieve compelling financial success. At the same time, these projects need to be environmentally improving as well.
“This agreement marks an important step for Scatec as we enter the Colombian market with a commercially robust project.” – Scatec CEO Terje Pilskog
As construction plans advance, Scatec’s efforts will contribute significantly to Colombia’s energy transition and the broader goal of increasing renewable energy utilization in the region.