Since its founding in 1998, project development for solar-thermal power plants has been the Company’s core business. Planning solar-thermal power plants requires a high degree of technical, geographic and organizational expertise as well as close familiarity with the respective country. The tasks involve evaluating possible power plant locations, procuring land and completing all approval procedures.
In order to appropriately assess a potential location, Solar Millennium takes its own meteorological measurements on site in the scope of a feasibility study. These measurements are taken with the help of a meteo station, which has been developed by the Company itself and works automatically. The main function, in addition to recording other data, is to record the direct normal irradiation over the duration of at least one year and to synchronize this with years of satellite data. Other important factors for selecting a location are the soil conditions, the ability to access the grid and the availability of water. Parabolic trough power plants require a reasonably flat surface for aligning and piping the vast solar fields as well as access to water for cooling within the steam cycle and cleaning the mirrors. In extremely arid locations, an air-based dry cooling system can be used in place of wet cooling.
Depending on the location, procuring land may take a relatively long time. This is a question of the number of owners involved. It is therefore necessary to begin securing suitable land long before the financing contracts for the construction of a power plant are signed. Before a power plant project can be actually implemented, a multitude of additional project steps have to be concluded until all the approvals and authorizations for construction and operation are on hand and the reimbursement for the energy produced is contractually guaranteed.
An internal project company is founded for each project. In the course of realizing each project, stakes in these project companies can gradually be sold to interested investors. The successful sale of power plant investments, i.e. stakes in project companies, is an important component of the positive sales and earnings performance. Once an investor invests in a project company, the company usually charges a project development fee. This step ensures that the project development risk, which Solar Millennium bears in its entirety at the beginning, is then shared with the investor in relation to his or her investment. This is the reason why the Project Development and Project Financing segments are so closely linked.
Against the backdrop of rising investment volumes in ever larger power plants, particularly in the U.S., Project Financing is gaining in significance. The increasingly complex financing structures require an extremely high degree of expertise. Solar Millennium has continuously gained additional experience in this field over the course of the last few years and today has a number of financing options to fall back on. In general, these options include bringing in a partner for financing and realizing the solar power plants through the sale of stakes as early as in the development and construction phase. In order to realize a project as quickly as possible, the financing is planned parallel to the project development.
One of the project financing options consists of debt capital financing, whereby banks provide loans for the construction of a solar power plant. In this case, the project developer must provide the necessary equity together with its potential project partners. Examples of this type of project financing are Europe’s first parabolic trough power plants, Andasol 1 and 2 in the south of Spain.
Solar Millennium has created a second financing option that is initially independent of banks, namely pure equity financing. Here, an investor takes over a stake in the project company, which is then incorporated into the investor’s balance sheet. Thus, the total investment sum for the solar power plant is provided directly by the investor’s capital resources. It may be refinanced at a later stage if necessary. This investor is usually a utility company or a major energy-intensive company that is also interested in operating the plant later on. Nevertheless, other investors with a long-term strategy, such as insurance companies, pension funds or infrastructure funds are also showing great interest. The Andasol 3 power plant developed by the Solar Millennium Group in the south of Spain is an example of full equity financing.
A third option is likewise independent of banks and was devised to meet the demand from numerous private and medium-sized investors for this type of financial product. In this case, part of the project company’s capital demand is raised via a closed-end fund. One example of this type of financing is the investment in the fourth of the Spanish power plant projects, Ibersol. The participation right from this investment has been sold to a fund company. Solar Millennium Invest AG organizes the marketing and sales of these fund shares. The company was founded by Solar Millennium in March 2010 as an independent sales company for green investment products and as a reaction to the growing significance and the associated requirements with regard to professionalism and transparency in the course of constantly increasing financing needs.