Chile/Loan Insurance for Huatacondo Photovoltaic Project

June 23, 2017

Nippon Export and Investment Insurance

Nippon Export and Investment Insurance (NEXI; Chairman and CEO: Kazuhiko Bando) has decided to provide loan insurance for the Huatacondo photovoltaic project. This is the first time that NEXI has supported so-called merchant power plant1 project financing.

The project aims to build a 98.0MW photovoltaic power station in Huatacondo, located in the Atacama Desert, northern Chile, to sell the generated electricity to the Chilean wholesale power market. The project is implemented via AustrianSolar Chile Cuatro SpA,2 an electric service company jointly established by Sojitz Corporation (Sojitz), Shikoku Electric Power Co., Inc. (Shikoku), Sojitz Corporation of America (Sojitz America), and a French company Eiffage S.A. (Eiffage).

The Chilean government is promoting introduction of renewable energy, aiming to generate 70% of national energy from renewable sources by 2050. The government’s promotion policy also includes a certain level of renewable energy purchase obligation imposed on local wide-area power companies. The photovoltaic project is expected to make a positive contribution to GHG emission reductions under the government’s policy, and to the nation’s economic and social development through power generation.

Unlike a contract with a state-owned power company that is generally associated with a power purchase agreement, loan payment made under this merchant power plant project is dependent on power sales proceeds from the wholesale market, which means market price fluctuations reflecting power supply and demand trends might lead to smaller repayment resources than initially expected. However, given the declining solar-panel prices and Huatacondo’s world-class abundance of solar radiation, NEXI has concluded that the Huatacondo photovoltaic power station will exceed the nation’s thermal power station in terms of cost competitiveness.

In this project, AustrianSolar Chile Cuatro SpA is going to raise co-financing (USD 73.31 million in total), and NEXI will provide insurance to support part of the financing (USD 47.20 million) offered by Sumitomo Mitsui Banking Corporation, Mizuho Bank, Ltd. and the Iyo Bank, Ltd.

As a financial institution implementing Japan’s policy, NEXI will continue to promote infrastructure development that contributes to GHG emission reductions through supporting Japanese companies.

Insured Sumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.
The Iyo Bank, Ltd.
Insurable Value USD 47.20 million
Tenor Approx. 18 years
Covered Risks Political Risk 100%, Commercial Risk 90%

Contact: Power Group, Structured and Trade Finance Insurance Department

1 A merchant power plant is operated to sell generated electricity in the power wholesale market. Chile has been advancing electric power deregulation, with IPPs entering not only in power generation sector but also in transmission and distribution sectors.

2 Stake owned by Sojitz (45%), Shikoku (30%), Sojitz America (15%) and Eiffage (10%)