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SOLAR 350 GREENLIGHTS CREATION OF MEXICAN SPV

Solar 350 has green lighted the creation of the Mexican SPV (special purpose vehicle) called Solar 350 Baja Cali 1.

This is the legal entity is due to hold the development assets of the first of the Mexican Solar projects. Specifically, this is a 60 Mw Project located towards the top of Baja California in Mexico. The plant will service the energy needs of the rapidly developing Baja region and the rapidly increasing industrial base located around the border town of Tijuana.

Many of you will know of Tijuana from its reputation as a party town, but the rapid economic development in that area is changing the investment climate for renewables in Mexico. Not only is the Baja becoming a hotspot for celebs but this area just south of the American border has become a hotspot for American manufacturing companies. Baja California offers US firms lower costs with easy oversight and an educated, English speaking workforce.

For renewable developers, Baja offers a high electricity price with aggregate demand increasing at 5-6% per year. Combine this with a relatively flat (between winter and summer) annual solar irradiation figure of 6.4 KWh/M2, and a minimum carbon price of 3 USD per MW (new United Nations subsidies on their way for CERs). Baja California is ideal for Solar 350’s approach, focused on optimal carbon emissions reductions in the right geographies, sensible carbon accreditation potential (through our established UNFCC DCM accreditor, Carbon 350).

Of course it is not only this: every country faces challenges, but LATAM and specifically Mexico is not facing any of the problems of Europe (like extremism or immigration issues) its economy is growing rapidly, interest rates are 3% in Mexico (making debt finance cheap when we get to project construction). It is also due to benefit from a buoyant economy in the US (rising GDP and interest rates) and also benefits from a stable legal system based on Spanish and international law.

350 of course has boots on the ground, Headed by Axel Schmid, our uncompromising Bavarian Head of Project Origination, which ensures that our estimates, calculations, structures and legal agreement remain as accurate and efficient as the most highly engineered motor cars. He is seconded by our 3 project developers and overseeing all development, Grue & Hornstrup A/s, our AA rated Danish Engineering partners and the majority shareholder in Solar 350. G&H have been involved in over 150 environmental projects since 1998 and accordingly, provide the necessary oversight to ensure we not only develop a profitable project but we can access the new United Nations subsidies as well.

“Financing this by EIS, by our estimates and based on the projects that we have seen so far, Solar 350 stands to make around 8M USD in 8-15 months. Of course sterling is weak at the moment versus the dollar, but as we feed the cash in over milestone payments over the 8-15 months, hopefully sterling will strengthen. But really with a project that produces a forecast unlevered return of 17% Internal Rate of Return (IRR- which adjusts return for the time value of money and should not be confused with ROI), currency fluctuations are relatively immaterial. What is more, this represented the deployment of solar power in an area that requires that power, in an area suitable to the specific renewable energy technology and that based on the project size (60MW) will lead to emission reductions of circa 60,000 tons of CO2e equivalent per annum – it is a win, win, win, win, win project”.
Nick Dimmock, Managing Director of Solar 350

For those of you that feel more comfortable with a ROI figure, over 12 months, we are forecasting 1700% ROI to Solar 350 based on internal financing. Solar 350 will however be marketing this to institutions as well, knowing how keen they are to deploy capital into the world most effective and profitable environmental projects.

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