Going beyond the classic ways of financing
 

Recently, when Solar Millennium AG reached an agreement regarding the sale of shares in the Andasol power plants to a solar fund, it had mentioned that it had chosen an instrument which goes beyond the classic ways of financing.

Though the company had mentioned that the transaction is subject to board approvals and was therefore currently conditional, it acknowledged that when added to the results of the project development, technology and plant construction business sectors, this sale secures the envisaged net profit of € 18 million for Solar Millennium for the current fiscal year.

Such initiative gives group "the necessary flexibility and extended room for manoeuvre against the background of the profound financial market crisis".

Christian Beltle, CEO, Solar Millennium AG, had said: "Through this innovative concept we have adapted to the modified financial market conditions within a short period of time. With a view to our well equipped project pipeline, the financing via funds also provides an excellent alternative for our future projects."

In order to know more, CSPToday.com recently spoke to the company's spokesperson Sven Moormann about the solar fund, plans for a new corporate bond which was shared in June this year and expansion of technological portfolio. Excerpts from the conversation:

CSPToday.com: Recently, Solar Millennium AG reached an agreement regarding the sale of shares in the Andasol power plants to a solar fund. Can you provide an insight into what factors were taken into consideration before finalising this concept especially in the context of the financial market crisis?

Sven Moormann: The Solar Millennium AG business model covers all of the important business sectors within the value-added chain of solar thermal power plants: project development - project financing - technology - power plant construction - power plant investments. An important part of the business model is to sell power plant shares.

With the creation of a solar fund, we reacted also to the demand of many investors for a stake in a solar power plant. The sale of shares in project and power plant companies was planned in the fiscal year 2007-2008 having a particular impact on the results. The financial market crisis has reduced the possibilities of project developers to get access to project debt-financing. Apart from that the financial market crisis does not have any impact on the planned exit for the Andasol shares. In particular due to fact that debt and equity for the Andasol project in general were closed within financial closure 2006. Concurrently, an investment in a solar fund even in this market situation is very attractive for investors because feed-in-tariffs for the power produced by solar thermal power plants are guaranteed by the Spanish state. Therefore, it is a calculable and predictable investment.

CSPToday.com: In June this year, Solar Millennium had shared that it is preparing to issue a new corporate bond to the value of €40 million. With these proceeds, the company planned in particular to pre-finance important power plant components which have long delivery times. Can you provide an insight into this or the current status and also since the planned bond serves the pre-financing of components for further power plant projects, especially in Spain, what are your plans for Spain other than Andasol projects?

Sven Moormann: Currently, two-thirds of the bond are subscribed. Andasol 1 is currently being put into operation, Andasol 2 is planned to be finished by spring 2009 and early works have begun for Andasol 3. In addition, Solar Millennium has a pipeline of several further projects for parabolic trough power plants with 50 MW in different Spanish regions. The next project to be realised in Spain is our project Ibersol. Worldwide projects are planned with an overall capacity of over 2,000 Megawatts. Apart from Spain, the current regional focus is on the USA, China and North Africa.

The proceeds of the bond are used to pre-finance key power plant components ahead of time, such as the turbine, and, additionally, they serve to provide bank securities in completing the projects, especially in depositing securities.

CSPToday.com: The company earlier this year had broadened its technological portfolio to make solar thermal power plants in hybrid operation work round the clock. Can you elaborate on what are the major challenges for using both solar energy and clean gas from the decomposition of regenerative feedstock?

Sven Moormann: The task of utilities is to provide electricity when it is needed. Renewable energies are being criticised for not being able to cover the base load (being available all the time), as wind and sun offered by nature are not constantly available. Solar thermal power plants have one great advantage due to the integration of thermal storage: Their electricity generation can be provided in a planned manner and thus contributes to stabilise the power grid. Solar Millennium's Andasol power plants in southern Spain are equipped with this type of storage. With our technology, the plannable generation of electricity is made possible not only by thermal storage, but also by a combination of several energy sources in hybrid operation, e.g. natural gas and solar energy. Firing systems, e.g. natural gas burners, can support a plannable electricity generation. With the hybrid solution, solar thermal power plants can produce electricity round the clock.

Our goal is to offer plannable electricity (round the clock) fully on a regenerative basis. To achieve this goal, Solar Millennium is investing in a research project on sustainable conversion technology called the Blue Tower. Reforming of regenerative feedstock (such as roadside green cuttings) produces a clean product gas, the so-called Blue Gas. It can be used for hybrid operation in parabolic trough power plants for power generation. Feedstock from agriculture and forestry that cannot be used in any other way, such as chicken manure, olive stones, or roadside green cuttings are utilised for this purpose. Blue Tower is an example of multi-feedstock technology. Thus Blue Tower does not depend on a single feedstock and its cost-efficient availability. This implies a multitude of location-specific potential on a worldwide basis.

The next step is to demonstrate the technology - the Blue Tower in Herten, Germany. Once, it has proved its reliability, solar thermal power plants and the clean gas product of the Blue Tower technology may be recombined in hybrid plants.