First Reserve acquires €276m solar plant

The investment represents First Reserve’s first deal from a joint venture with SunEdison, which could provide up to $1.5bn in investment depending on future opportunities. First Reserve energy infrastructure head Mark Florian said in an interview 'there is a lot more to come' in similar investments.

First Reserve Corporation has acquired a solar power plant for €276 million, marking the first big investment for its energy infrastructure team.

The 70 megawatt plant, located near the town or Rovigo in Northeast Italy, was jointly developed and co-owned by solar energy developer SunEdison and Banco Santander prior to the sale, according to a statement.

The deal is the first to be struck under a joint venture launched in May whereby the energy private equity firm would invest in current and new SunEdison projects. Together, the two firms provided an initial equity commitment of $167 million for the venture.

There is a lot more

Mark Florian

First Reserve has allocated €46 million from the initial equity commitment toward the Rovigo plant.

“It’s a down-payment,” First Reserve energy infrastructure head Mark Florian said in an interview.

The remaining €230 million will be financed through additional equity and debt and will be paid once the plant is connected to the electric grid.

Private asset managers Partners Group AG and Perennius Capital Partners SGR are expected to co-invest in the project, SunEdison said in the statement.

SunEdison, the solar energy development division of publicly-listed MEMC Electronic Materials, will continue to manage the ongoing operations and maintenance of the plant.

Workers install
solar panels at a
SunEdison plant.

Upon completion, the Rovigo plant will be the largest operating photovoltaic solar power plant in Europe, according to SunEdison. Its size made it an attractive investment opportunity for First Reserve. First Reserve’s infrastructure team has already invested in three other photovoltaic power plants in Italy, but they were all on a scale of about one megawatt.

“This is seventy,” Flrian said.

For each kilowatt-hour the Rovigio plant produces, it will receive 35 Euro cents under an agreed feed-in tariff with the Italian government, Florian said. The term of the tariff is 20 years, so Florian expects the plant to exhibit steady, predictable revenues he seeks in infrastructure investments.

Spain, another country with attractive feed-in tariffs for solar projects, is considering reducing them retroactively. Florian said he doesn’t foresee a similar move impacting First Reserve’s investments in Italy.

“The Spanish government was subsidising part of the payment, which, as the budget became under pressure, this was one of the items that was looked at [as], ‘why are we doing this?’” Florian said. “That is not the case in Italy. There is no Federal budget support in Italy – ultimately the consumer pays [for the subsidies].”

Besides Italy, First Reserve’s joint venture with SunEdison also covers the US and Canada. Florian said his team is also looking at solar investments in those regions.

“We are actively working on a number of other facilities that would be added to the portfolio,” Florian said. He did not name a number but said “there is a lot more to come.”

Cezary Podkul contributed reporting to this story.