Spanish cleantech private equity firm SI Capital Partners is one company which seems to be reaping early rewards for its perseverance in the CSP sector.

Recently, it was reported that SI Capital's R&S I renewable energy fund, an early investor in Enerstar Solar Thermal Project, attracted additional investors at a much higher valuation for the same project.

Speaking exclusively with CSPToday.com, SI Capital's managing partner Sebastian Waldburg said: "Enerstar Solat Thermal Project is one of the few independent  development companies for CSP projects in Spain and elsewhere. We have recently raised some additional equity at a significantly higher valuation than the one applied when SI Capital invested nearly two years ago."

Though he didn't provide specifics, Waldburg said valuations of CSP projects as well as any other renewable energy project have two main components: one is a purely financial components of what IRR an investor can generate by holding the equity of each project at a specific price and the other depends on the strategic interest of the investor and his willingness to pay an additional premium for achieving his strategic target.

Waldburg, who is scheduled to speak during CSP and CPV Investment & Finance Summit (8-9 October in Madrid), acknowledges that the incentives for developing solar in many European markets arise from the significant feed-in tariffs that solar generators can collect from utilities to which they sell electricity.

"Solar energy still is very much driven by regulation and a favourable regulatory environment. This may be feed-in tariffs or other mechanism to additionally remunerate each kWh generated. Even though solar technologies have been able to slash costs significantly in the last few years, it still is not competitive at current electricity market prices," says Waldburg.

Apart from the regulatory environment, it is acknowledged that the success or failure of solar projects depends not only on getting units installed, but learning how best to financially structure your project.

On how should companies approach various options be it project finance, VC etc, Waldburg says this depends very much on what stage of development in a project we are talking.

"At an early development stage, as an investor you would want to structure the financing as securely as possible, making draw downs of the committed money available upon milestone completion, diversify the development pipeline without loosing focus, etc. Thinking about the project – financeability of each project from an early stage onwards is key to actually get projects financed with non (or at least limited) recourse. Here permitting, EPC and O&M contracts as well as land control are critical," he says.

According Waldburg, both technologies CSP as well as CPV have significant room for technological advances which result in the reduction of kWh prices.

"The know-how generated and technologies developed in one of these sectors can be extremely useful for the other. Obviously PE and VC play a very important role in financing these companies and taking them from early stages all the way through to the stock exchange if they prove to be developing the right kind of technology. As in all the other sectors, not all companies have the right kind of technology or business model to thrive in the solar markets," he says.

Talking of Spain, in the past the solar market has witnessed developments related to implementation of feed-in tariffs and Royal Decree RD 661/2007 last year. Even today, the support of CSP sector is being sustained. Even as Spain has shared its plans to cut its subsidies for solar photovoltaic (PV) power by almost 90 percent, the solar thermal power sector in the country isn't perturbed as the same doesn't apply to solar thermal yet.

Spanish cleantech private equity firm SI Capital Partners is one company, which seems to be reaping early rewards for its perseverance in the CSP sector.

Recently, it was reported that SI Capital's R&S I renewable energy fund, an early investor in Enerstar Solar Thermal Project, attracted additional investors at a much higher valuation for the same project.

Speaking exclusively with CSPToday.com, SI Capital's managing partner Sebastian Waldburg said: "Enerstar Solat Thermal Project is one of the few independent  development companies for CSP projects in Spain and elsewhere. We have recently raised some additional equity at a significantly higher valuation than the one applied when SI Capital invested nearly two years ago."

Though he didn't provide specifics, Waldburg said valuations of CSP projects as well as any other renewable energy project have two main components: one is a purely financial components of what IRR an investor can generate by holding the equity of each project at a specific price and the other depends on the strategic interest of the investor and his willingness to pay an additional premium for achieving his strategic target.

Waldburg, who is scheduled to speak during CSP and CPV Investment & Finance Summit (8-9 October in Madrid), acknowledges that the incentives for developing solar in many European markets arise from the significant feed-in tariffs that solar generators can collect from utilities to which they sell electricity.

"Solar energy still is very much driven by regulation and a favourable regulatory environment. This may be feed-in tariffs or other mechanism to additionally remunerate each kWh generated. Even though solar technologies have been able to slash costs significantly in the last few years, it still is not competitive at current electricity market prices," says Waldburg.

Apart from the regulatory environment, it is acknowledged that the success or failure of solar projects depends not only on getting units installed, but learning how best to financially structure your project.

On how should companies approach various options be it project finance, VC etc, Waldburg says this depends very much on what stage of development in a project we are talking.

"At an early development stage, as an investor you would want to structure the financing as securely as possible, making draw downs of the committed money available upon milestone completion, diversify the development pipeline without loosing focus, etc. Thinking about the project – financeability of each project from an early stage onwards is key to actually get projects financed with non (or at least limited) recourse. Here permitting, EPC and O&M contracts as well as land control are critical," he says.

According Waldburg, both technologies CSP as well as CPV have significant room for technological advances which result in the reduction of kWh prices.

"The know-how generated and technologies developed in one of these sectors can be extremely useful for the other. Obviously PE and VC play a very important role in financing these companies and taking them from early stages all the way through to the stock exchange if they prove to be developing the right kind of technology. As in all the other sectors, not all companies have the right kind of technology or business model to thrive in the solar markets," he says.

Talking of Spain, in the past the solar market has witnessed developments related to implementation of feed-in tariffs and Royal Decree RD 661/2007 last year. Even today, the support of CSP sector is being sustained. Even as Spain has shared its plans to cut its subsidies for solar photovoltaic (PV) power by almost 90 percent, the solar thermal power sector in the country isn't perturbed as the same doesn't apply to solar thermal yet.

"Spain was the first country to introduce a feed-in tariff for CSP in 2004 and includes CSP targets in it renewable energy plan."

According to Waldburg, currently more than 300 MW are in construction and some of these should be coming online this year.

"A large pipeline of projects are in different development stages and the regulator will have to take a view on whether he wants to give continuous support to a sector where Spain is one of the world pioneers," said Waldburg.

"Given current oil prices and the apparent acceleration of climate change, it seems to make a lot of sense to invest into technologies and projects which will allow us to generate energy via renewables and solar very specifically so. I believe that the governments will have sufficient long-term views to continue supporting the growth and therefore the cost reductions the sector requires to be 100 percent competitive with conventional energy sources. In the current environment, investor views may have to be slightly more long-term. The underlying arguments are even stronger now," added Waldburg.

It is being projected that the combined average growth rate of CSP capacity over the last five years has been at around 250 percent and 16,000MW could be installed by 2015.

On the same, he said, "I believe these historic growth figures are somehow overstated. With regards to future growth, I believe that we could see somewhere around 5.000 MW installed by 2015. This technology will obviously be installed in areas where strong solar radiation can be combined with regulatory support."

According to Waldburg, there are couple of major hurdles impeding the growth of CSP sector.

"One is the current capacity cap on the target capacity of 500MW to qualify for a 27 cents feed-in tariff and we do not know what will happen thereafter. The other major issue is the availability of EPC contractors who are willing to work for third parties rather than focusing on the construction of their own projects. The sector as a whole can be described as tight given the few companies which manufacture key components," summarised Waldburg.

CSP and CPV Investment & Finance Summit

SI Capital's managing partner Sebastian Waldburg is scheduled to speak during CSP and CPV Investment & Finance Summit (8-9 October in Madrid).

For more info, click here: www.csptoday.com/eufinance.com/

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