Total S.A. (“
Total”) (CAC: TOTF.PA) and Etrion Corporation (“Etrion”) (TSX: ETX / OMX: ETX) today announced the planned construction of Project Salvador, the world’s largest solar power project based on spot market electricity (“merchant”) revenues.
Project Salvador will be a 70 megawatt-peak (“MWp”) photovoltaic power plant in the Atacama region of Chile. Pursuant to the terms of the related purchase agreement, Etrion, Total and Solventus Energías Renovables (“Solventus”) will own 70%, 20%, and 10% interests, respectively, in the project. The total project cost of approximately US$200 million will be financed 70% through non-recourse project debt from the Overseas Private Investment Corporation (“OPIC”), the US Government’s development finance institution. The remaining 30% equity portion will be funded by Etrion, Total and Solventus, based on their respective ownership interests.
Project Salvador will be built by Total’s affiliate, SunPower Corporation (“SunPower”) (NASDAQ: SPWR), a US solar energy leader offering solutions unmatched in efficiency, reliability and performance. Project Salvador will also enter into a long-term fixed price operation and maintenance agreement with SunPower.
“Project Salvador is an important step in the process of transforming the capabilities of solar power in the world. This merchant project confirms that solar energy is becoming competitive with other conventional energy sources,” said Philippe Boisseau, President, Marketing & Services and New Energies and a member of the Executive Committee of Total. He continued, “Solar power is a compelling proposition in Chile due to the amount of solar irradiation received every day in the region. Combined with Chile’s high electricity prices, large energy demand and low construction costs, solar can compete with traditional sources of electricity in Chile without government subsidies. As a world leader in the solar industry, we are proud to launch with our partners the largest solar merchant project in the world, and we are pleased to assist Chile in the diversification of its energy mix. We look forward to further developing our solar activities in the country.”
Marco A. Northland, Etrion’s Chief Executive Officer, commented: “This is a very exciting opportunity for Etrion to work alongside Total, SunPower and Solventus in Chile. Project Salvador will demonstrate that solar is a viable and sustainable power solution in Chile given the strong solar irradiation and high electricity prices in the region. This project diversifies our portfolio in terms of geography and contract regime, demonstrates our ability to compete with traditional sources of electricity in a non-subsidy environment and provides a clear platform for growth that will give Etrion the option to declare dividends in the future.”
Chile has an investment grade rating and offers attractive investment opportunities for leading financial institutions to provide non-recourse project finance. Project Salvador will be financed 70% by OPIC with US dollar-denominated, non-recourse project debt with a 19.5-year tenor. The debt financing was approved by OPIC’s Board of Directors on September 19, 2013, with financial close expected in the fourth quarter of this year.
The company in which Etrion, Total and Solventus will hold their respective ownership interests holds the licenses, land rights and permits necessary to build, own and operate Project Salvador. Project Salvador will initially operate on a merchant basis where the electricity produced will be sold on the spot market and delivered to the Sistema Interconectado Central (“SIC”) electricity network, with the ability to secure future power purchase agreements (“PPAs”). The solar power plant will be built on 133 hectares leased from the Chilean government through a long-term concession. The facility will connect through the power infrastructure of Corporación Nacional del Cobre de Chile (“Codelco”).
Construction is expected to start during the fourth quarter of 2013, and Project Salvador is expected to be operational by the first quarter of 2015 at the latest. SunPower will install their SunPower Oasis™ Power Blocks system, a fully integrated solution utilizing SunPower’s high efficiency solar panels and single-axis trackers.
Once operational, Project Salvador is expected to produce approximately 200 gigawatt-hours of solar electricity per year, enough to supply electricity to approximately 60,000 people in Chile.
Total is one of the largest integrated oil and gas companies in the world, with activities in more than 130 countries. The Group is also a first rank player in chemicals. Its 97,000 employees put their expertise to work in every part of the industry – exploration and production of oil and natural gas, refining and marketing, new energies, trading, and chemicals. Total is working to help satisfy the global demand for energy, both today and tomorrow.
Total is striving to diversify its supply to help meet growing energy demand in the long term. The Group holds a 66% stake in SunPower, a world leader in solar energy. Additionally, Total is actively engaged in a number of renewable research and development projects, such as solar and biomass.
Etrion Corporation is an independent power producer that owns and operates renewable assets. Etrion currently has approximately 60 MWp of operational, ground-based solar photovoltaic power plants in Italy. Etrion is pursuing opportunities in Chile to complement its existing business by developing solar projects with long-term PPAs or at merchant. Etrion is listed on the Toronto Stock Exchange in Canada and the NASDAQ OMX Stockholm exchange in Sweden. Etrion’s largest shareholder is the Lundin family, which currently owns 24.5% of Etrion directly and through various trusts.