IDB Invest Strengthens Uruguay’s National Power System, Renewable Energy Production
IDB Invest, a member of the IDB Group, has provided a $67 million financial package for Tealov S.R.L (Tealov), a Uruguayan special purpose company (SPV) sponsored by Invenergy Renewables Global LLC (Invenergy) to develop the Cardal Transmission Project in Uruguay.
The financial package includes a $11.5 million loan and a $55.5 million B-bond, acquired in its entirety by Prudential Private Capital, the private capital business of Prudential Financial, Inc. (NYSE:PRU). The proceeds provide resources to support the long-term reliability of the national electricity system in Uruguay and enable increased renewable energy production by expanding the electricity network necessary to deliver energy to the demand centers.
Through the B-bond structure, IDB Invest will help unlock financing available from international institutional investors at longer tenors than available in the market, channeling new resources to keep supporting the development of infrastructure projects in Uruguay. Additionally, the structure of the project encourages investors to expand the types of risks that they are willing to undertake in the region, in particular construction which would be a first for a B-bond transaction.
This project consists of the design and construction of a 500 kV substation in Cardal, which will section the existing Palmar-Montevideo Transmission Line; a 55-km 500 kV transmission line connecting the new substation in Cardal to Punta del Tigre; a 20 km 150 kV transmission line connecting Salto Grande to Salto B substation; and provision of ancillary works for existing substations. Tealov has signed an operating lease contract with the National Administration of Power Plants and Transmission (UTE) for the construction of the project.
Once the substation and transmission lines reach completion, the transmission capacity and operation will be transferred to UTE which will pay a monthly lease to Tealov for 20 years for use of the substation, and 30 years for use of the transmission lines.
The project has obtained a Baa2 rating assigned by Moody's Investors Service, in line with Uruguay´s sovereign rating. The Baa2 rating recognizes that construction risk is partially mitigated and reflects that the expected repayment of the notes ultimately relies on fixed payments from UTE with Tealov.
Expanding the transmission capacity is essential to accommodate Uruguay’s shift towards non-conventional renewable energy, particularly solar and wind energy. The Cardal project represents approximately 5.25% and 0.44% of today's 500 kV and 150 kV system transmission network, respectively.
This deal is expected to contribute to four United Nations Sustainable Development Goals (SDGs): Affordable and Clean Energy (SDG 7), Decent Work and Economic Growth (SDG 8), Industry, Innovation and Infrastructure (SDG 9), and Partnerships for the Goals (SDG 17).
About IDB Invest
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development in the region. With a portfolio of $13.1 billion in asset management and 385 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
We are innovators building a sustainable world. Invenergy and its affiliated companies develop, own, and operate large-scale sustainable energy generation and storage facilities in the Americas, Europe and Asia. Invenergy's home office is located in Chicago, and it has regional development offices in the United States, Canada, Mexico, Colombia, Japan, Poland and Scotland. Invenergy has successfully developed more than 29,000 megawatts of projects that are in operation, construction or contracted, including wind, solar, and natural gas power generation facilities as well as advanced energy storage projects. For more information, please visit www.invenergy.com.
About National Administration of Power Plants and Transmission
UTE, or Administración Nacional de Usinas y Trasmisiones Eléctricas in Spanish, is a vertically integrated public utility established under the laws of Uruguay. It will have a role as offtaker and operator of the Project. UTE was created by Law 4,273 of October 21, 1912. It provides services related to the generation, transmission, and distribution of electricity to approximately 1.3 million customers. As of 2019 UTE’s transmission network was composed of approximately 85,235km low and medium voltage and 5,790km of medium-to-high voltage TLs.
About Prudential Private Capital
For nearly 100 years, Prudential Private Capital has been partnering with a wide range of corporations, sponsors, and institutions to provide valuable insights, guidance, and customized capital solutions that enable them to achieve their growth and funding goals. In an industry where capital can seem like a commodity and relationships are often fleeting and transactional, we are known for building enduring local partnerships based on a steady and patient commitment to our partners’ long-term capital needs. With regional teams in 15 offices around the world, we manage a portfolio of US$100 billion for our partners. All data as of June 30, 2021. For more information, please visit prudentialprivatecapital.com