Arctas Sells Largest Central American Wind Power Plant to AEI

Arctas announced today that it has sold its 47.5% joint controlling interest in the 63MW Amayo I and Amayo II wind farm projects in Nicaragua to AEI, one of the largest emerging markets power and gas companies. AEI, together with its partner Centrans, a regional energy and shipping company based in Guatemala, have increased their joint holdings in Amayo to 95% with local partners owning the remaining 5% of each project.

The amount of the transaction is undisclosed, but the two-phase Amayo project represents an investment of approximately US $150 million, among the largest privately developed wind energy investments in Central America.

David Haug, Managing Director of Arctas, stated, "This sale is significant because even in a challenging region in the midst of a global financial slowdown, Arctas was able to achieve its objective of attracting a world class owner of emerging market power projects, enabling us to continue to deploy capital in new development efforts.

Nicaragua may surprise people with the strong investment fundamentals compared to other emerging markets in addition to the fantastic wind power resource and government enthusiasm for renewables."

Amayo is the largest wind farm in operation in Central America and the only one to be completed outside of Costa Rica. It will provide approximately eight percent of the total power consumed in Nicaragua. The country now joins Denmark, Portugal and Spain as one of the top five countries that generate power from wind energy.

Arctas and Centrans brought on-line the first 40 MW phase of Amayo in early 2009 and the second 23 MW in April 2010. Located on the shores of Lake Nicaragua south of Rivas and 11 kilometers north of the Costa Rican border, Amayo enjoys one of the best wind resources in the North American continent.

Amayo will displace more than 400,000 barrels of imported fuel oil per year and reduce around 175,000 tonnes of CO2 per year. The plant’s expected capacity factor is in excess of 47 percent, among the highest in the world.

Despite the difficult financial markets and the cancellation of many projects in the US and Europe during 2008 and 2009, the second 23 MW phase was completed in 14 months from start of permitting to full commercial operation, thought to be a record for a wind farm project anywhere.

Nicaragua suffers from high electricity prices due to the high cost of imported fuel oil used to produce most of the country’s electric power. The Amayo project has helped lower electricity prices for the country in addition to providing environmental benefits.

Unlike wind farm projects in the US and Europe, Amayo does not receive government price subsidies, yet is currently selling power at a price more than forty percent lower than the average wholesale spot price over the past four years.

The principals at Arctas have worked on energy infrastructure projects in the region and worldwide for more than 18 years, focusing on power, gas and LNG, and formerly ran various Latin American, Asian and Middle East business units for Enron that survived the Enron bankruptcy and are now owned by AEI.

Arctas is continuing to develop additional wind power projects in the Central America/ Caribbean region. Amayo represents the fifth completed power plant developed and financed by the Arctas principals in Central America and the third in Nicaragua. The first phase closed financing and began construction activities in early 2008, and the second phase began construction late 2009. Amayo’s two phases are Arctas’s first completed wind projects.

Arctas is a privately-held project development, principal investment and advisory firm with a focus on energy-related opportunities, primarily in emerging markets. Arctas is headquartered in Houston, Texas and maintains operations in Latin America and Asia. 

Centrans Energy Services, Inc., a member of the Centrans Group of Companies (whose headquarters are in Guatemala City, Guatemala), develops, owns and operates power generation projects to provide needed electricity to the countries in the Central American region. It currently has investments in four power plants, mainly in Nicaragua, two of which are wind power projects. The other activities of the Centrans Group are related to shipping, port and terminal (liquid and dry bulk) related ventures.

At a time when few equipment suppliers were willing to take on emerging market projects in Latin America, Suzlon supplied thirty of its 2.1MW S88 V3 wind turbines for the two phases of Amayo.

Suzlon also served as turnkey contractor for the second phase. Suzlon’s 2.1MW turbines are installed on towers 80 meters tall, and are twice the capacity of any other wind generation units currently operating in Central America.

The Central America Bank for Economic Integration (CABEI) provided $71.25mm in financing for the first phase of the project, Amayo 1 was CABEI’s largest loan that has been disbursed to the energy sector and is in discussions to provide the permanent financing for the second phase along with 2-3 other global lenders.

Electricity produced by Amayo is sold under long-term contracts with DisSur and DisNorte, the two local electric utilities owned by Union Fenosa of Spain and is not tied to the price of oil. The Amayo project connects to the Nicaraguan grid, and the new interregional SIEPAC transmission line runs adjacent to the project site. Extending from Guatemala to Panama, SIEPAC will interconnect the six countries of Central America.