Corti Wind Project

El Corti wind power project (the “Project” or “El Corti”) will add 98.6 MW of renewable energy to the Argentinean electricity system, thus directly supporting the Government of Argentina’s (“GoA”) priorities to ensure a stable long-term electricity supply and the diversification of its energy matrix with the expected addition of 2.7 GW from renewables sources by 2018. The Project consists of the construction, operation and maintenance of a 98.6MW wind farm, its associated facilities, to be located south of the province of Buenos Aires, 17km northwest of the city of Bahia Blanca, Argentina. The Project will sign a 20-year power purchase agreement (“PPA”) with the wholesale electric market administrator (“CAMMESA”) to inject energy to the national interconnection system (¨SADI¨) via the 500KV-132KV Bahia Blanca substation, at a bidding price of US$59.36/MWh increased annually by an adjustment factor. Electrical studies were presented to the relevant authorities, which provided a favorable opinion to the Project´s interconnection specifications for the assigned node. The Borrower is expected to enter into a turn-key EPC contract covering civil works, equipment and turbines from a first-tier manufacturer and a long-term O&M contract for at least the life of the IDBG loan. It has an estimated 18-month construction period, with construction starting by the first quarter of 2017. Wind resource has been assessed by DNV based on on-site wind measurements from 2009 up to 2013, with average wind speeds of 8.9m/s at 93m hub height. The Project has a capacity factor of 51.8% and estimated annual energy production at P50 of 402.9GWh/year, with expected 4,537 equivalent hours.

Transaction Structure and Financing Highlights. The estimated total cost of the Project is of up to US$175.0 million, which will be financed through an IDBG A loan of up to US$50 million. The financial plan will be completed with the participation of two other lenders, from the bilateral financial institutions or export-credit agencies, as well as equity contributions for a 75/25 debt-to-equity ratio. The Project will be required to meet the customary debt sizing criteria applied to wind projects, DSCR 1.30x for P9010-years and 1.00x for P991-year. The IDBG loan is expected to have a tenor of up to 15 years door-to-door. The project will have the security package customary for this type of project finance transactions.

Development Impact. The Project will have positive developmental impacts, such as: (i) adding 98.6 MW of renewable capacity to the Argentinean grid, representing 15% of the total NCRE installed capacity, thus decreasing thermal and hydro generation reliance and contributing to the 20% goal of NCRE by 2025; and (ii) displacing approximately 198,226 equivalent tons of carbon emissions per year. Financial additionality is strong as the tenor of the financing is 15 years door to door, a long tenor that is critical for the financial viability of this type of infrastructure projects, and which is simply not available in the local capital markets[1]. Commercial banks have not structured long-term project financing transactions in Argentina for the last 10 years and hence the participation of multilateral and bilateral agencies in this first round of the RenovAR program will be key to its success.



[1] Source: Dealogic Project Finance Database