Quercus plots €600m Iranian solar investment

The 600MW plant will be one of the world’s largest in what is a major strategy shift for the Italian investor.

Italian renewables investor Quercus has unveiled plans to spend at least €600 million on a 600MW solar plant in Iran.

The company’s plans have been approved by the Iranian government and construction of the project is set to begin in the middle of the next year.

Quercus will be seeking investments for the project through its London-based subsidiary Quercus Investment Partners, largely from corporate investors, with a minimum ticket size of €50 million. Some 20 percent of the financing is expected to come from Iranian investors, a figure that is “beyond initial expectations” when the project was first floated, according to Hamid Baeidinejad, Iran’s ambassador to the UK.

Quercus’s planned site will benefit from a 20-year power-purchase agreement, as well as Iran’s feed-in tariff for solar projects above 30MW of €0.09 per kWh, although it could increase by up to 30 percent depending on the amount of locally-made equipment at the plant. It will be built in phases of 100MW across the space of three years, as part of plan to mitigate risks for investors and construction.

The project will be fully equity financed, with banks remaining reluctant to plough funds into the country, despite the lifting of sanctions on investment in Iran recently. Diego Biasi, chief executive of Quercus, said that once construction begins Quercus could look for refinancing solutions, including mezzanine facilities.

Biasi added that the company is seeking returns from the project of up to 15 percent, differing significantly from the returns it has generated from its previous fund investments. While it opened an office in Dubai earlier this year, Quercus had no existing investments outside of Europe and its current portfolio covers projects in Italy, the UK, Bulgaria and Romania that are typically no larger than 30MW.

“Following significant interest from potential and existing investors, we are thrilled to be developing one of the world’s largest solar PV plants in Iran, presenting an unrivalled opportunity to tap into the huge potential in the country’s renewable energy market,” Biasi said.

Despite an attractive climate for solar investments, Iran has only about 32MW of installed solar capacity, according to the International Renewable Energy Association. Much of its approximate 10GW of installed renewables capacity comes from hydropower projects.