Israeli firm snaps up Europe’s largest solar farm

The project, which is yet to be built, is expected to cost the company up to €255m and would be the first significant solar development in Spain in over four years.

Tel Aviv-listed energy developer Ellomay Capital has acquired a company in Spain with the rights to build what would be Europe’s joint-largest solar park.

The firm has paid €10 million for the shares of Talasol Solar, which in 2014 received approval to build a 300MW solar project in Spain’s western Extremadura region. Ellomay said the project’s costs will total between €225 million and €255 million and that the facility could be construction-ready within the next 10 to 15 months, according to the company’s advisers.

Once built, the site would rank alongside the Cestas solar farm in France as the largest on the continent. Cestas was brought online in December 2015 and cost developer Neoen about €340 million.

Ellomay said it will seek funding for the plant through equity and debt financings as well as through potential partnerships, although it stressed that it has not yet reached any agreements or understandings in this respect. It expects to earn net annual revenues from the project of about €19 million.

Following retroactive cuts to solar subsidies earlier this decade, the Spanish greenfield solar market has come to a halt, with only 86MW installed since 2013, according to the International Renewable Energy Agency.

In another sign of potential hurdles to the industry’s recovery, the Spanish association last week called for changes to the rules for Spain’s upcoming 3GW renewable energy auction, saying the tariffs favour wind energy. However, these issues have seemingly not deterred Ellomay, which hailed the industry’s prospects.

“The Talasol opportunity intrigued us, and we received good feedback on the project's location and characteristics and on the expected future of the Spanish solar market from various market players, such as EPC contractors, utilities, brokers, investment banks and commercial banks in the Spanish and European markets,” chief executive Ran Fridrich said.

“The high radiation in the Spanish peninsula, the significant decline of the panel prices and the relatively attractive finance costs are expected to allow the Spanish solar market to become an advanced grid-parity market.”

Ellomay has a small existing solar portfolio in Spain of 7.9MW and a further 22.6MW in Italy. It is also working on anaerobic digestion projects in the Netherlands and a 340MW pumped hydropower storage site in its native Israel.