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Spain's Ence signs Euro 101 million project to finance biomass renewable energy plant

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Spain's Ence signs Euro 101 million project to finance biomass renewable energy plant

June 22, 2011 - 00:42
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HUELVA, Spain, June 22, 2011 (Press Release) -Ence has closed a "Finance Project" for the amount of 101 million euros with seven top level Spanish entities, which represents the first financial operation of this nature in Spain for the financing of a biomass renewable energy plant. Ence also signed the EPC with OHL, which guarantees the execution of the project within cost, quality and time schedule.

Specifically, this will enable the largest biomass renewable energy plant in Spain to enter into operation in the last quarter of 2012. The plant is located in Huelva and has a total installed power of 50 MW, which will generate enough renewable energy to meet the energy requirements of more than 360,000 people.

The "Project Finance" has been coordinated by La Caixa and Banesto with participation from Santander, BBVA, Bankia, Banco Sabadell and ICO, which offer a risk of 145 million euros, representing an oversubscription of 44 million euros over the 101 million requested by Ence for this project.

This situation is evidence of the high level of confidence this group of financial entities places in the Ence biomass renewable energy project.

The main characteristics of this operation are the following:

  • 75% of the project will be financed with debt and 25% with own funds.

  • The financing term is 12 years, two of which correspond to construction and 10 years of amortisation during the plant's commercial operation.

The close of this operation will represent an improvement in Ence's liquidity position, since it will be able to recover part of the funds - up to 21 million euros - already invested in the project, which will place it in a cash position of 157 million euros.

Renewable Energy Plan 2011-2015

The financing obtained for the Huelga 50 MW biomass renewable energy plant is the first milestone in the company's Renewable Energy Plan 2011-2015, which involves the promotion of 210 MW of additional power in biomass renewable energy plants, and which is more than double the current installed power.

Ence presently has 180 MW in biomass renewable energy installed power, which makes it the leading Spanish company in biomass energy generation. Ence's last great milestone was in July 2010, with the start-up of the new Navia (Asturias) renewable energy plant, where the company built and started-up the plant which up until this time was the largest biomass energy generation station in Spain, with 37 MW of power.

The development of this new plan involves additional income of 225 million euros per year and an additional recurring Ebitda of 80 million euros every year.

Biomass renewable energy has a huge potential in Spain, which is the second leading country in the European Union in terms of forestry surface area. Some statistics for biomass renewable energy activity are:

  • It is the renewable energy that creates the most employment. Studies in the sector indicate that it creates 20 employees for every MW of installed power. Most of these employees are forestry workers and this serves to stimulate rural areas;

  • For each MW of installed power, it is possible to meet the electrical energy consumption of 7,250 people per year;

  • Biomass management is also coupled with the reuse of forestry wastes, which enables the risk of forestry fires to be reduced by 70%, without cost for the administrations;

  • Biomass renewable energy is the most stable of all and the only manageable energy source, given that the Ence model, based on energetic crops, guarantees stable supply and full operation of the plant for more than 8,000 hours per year, without relying on variable factors such as sunlight or wind or the availability of certain agricultural wastes.