Scatec, a renewable energy solutions provider, has signed a 10-year power purchase agreement (PPA) with Statkraft for a 142 MW solar plant in Minas Gerais, Brazil.
The agreement covers about 75% of the expected power produced, and the remainder is expected to be sold under short-, medium-, and long-term PPAs. The project’s estimated equity return goes beyond Scatec’s hurdle rate of 1.2x the project’s cost of equity.
The estimated total capital expenditure for the solar plant is $94 million, which will be financed by non-recourse financing. This financing will cover approximately 63% of the amount, with the balance funded by equity from Scatec.
Scatec is in discussions with lenders for a debt facility of approximately $16 million to partially fund its equity share in the project. The solar plant’s financial closure and construction are expected in the second half of 2024, and commercial operations will begin at the end of 2025.
“This is the third solar project for us in Brazil, taking the total capacity to 835 MW,” said Scatec CEO Terje Pilskog. “This is our first plant in the southeast submarket, diversifying and strengthening our portfolio in the country.”
Scatec will not only have a 100% ownership stake in the solar plant but also intends to bring equity partners to enhance value creation once commercial operation is reached. Scatec will also be the EPC manager for the project, which has a limited scope.
