Introducing The Super Sol Projects
The Super Sol projects are Solar 350’s development project sites. The majority of these sites are located in the south of the Atacama Desert, Chile.
Solar 350 has analysed solar development markets throughout the world including Australia, Western China, Chile, Indonesia, Mexico, Peru, Romania, France, Demark and The United Kingdom. Solar 350 has considered the changes likely to occur from a New Global Emissions Treaty which is tabled to be agreed in December 2015 as well as the formation of domestic emission trading schemes. It is clear that The New Treaty will focus on reducing emissions and attack the root cause of the climate change problem (increasing emissions).
As such, it is likely that we see an end to Feed in Tariffs and MWh based subsidies in the near future. This is because while these subsidies incentivise renewable energy generation, they make no distinction of the amount of emission reductions that are achieved per USD equivalent invested. This has lead to significant deployment of specific technologies in locations that are completely unsuitable to their application. UK Solar is an obvious example.
We have partnered with Danish engineering firm Grue + Hornstrup to create a flagship set of solar parks in the South Atacama Desert, Chile, to create an energy facility that will offer optimal CO2/CO2e emissions reductions and provide excellent opportunities for SEIS / EIS investment products created through 350PPM’s investment wing, EISco 350.
Building in the South Atacama Desert, Chile
As a result of our macro analysis, further specific country analysis, and discussions with Panel Manufacturers, Venture Capitalists, Development and Construction Banks and some of the largest asset managers and pension funds in the world, Solar 350 has identified the following location for extensive development:
- Northern Chile can receive annual solar irradiation of up to 3600 KWh per m2. The UK receives be- tween 500-1100 KWh/M2 before clouds are taken into account. After cloud effect is taken into account, it is anticipated that South Atacama Desert receives approximately ten times the solar irradiation of the United Kingdom.
- Chile is made up of 7 independent grids. The South Atacama Desert can supply the Central Grid (known as the SIC), which serves Santiago and surrounding industry. Electricity prices within the SIC have aver- aged $156 per MWh over the last three years. This is approximately 2.5 times that of the United Kingdom. Aggregate demand for electrcity is growing at 4-5% per year and thus ensures steady increasing demand as Chile transitions from developing world to developed.
- Chile’s electricity pricing is based on the marginal costs of electricity generation. Accordingly, prices are significantly more stable that in Europe, where a market mechanism is utilised. This provides more certainty for lenders, even though we acknowledge that Chile will have a higher country risk than that of the United Kingdom there
- Projects would also be eligible for Clean Development Mechanism Registration. We estimate that Atacama Solar would produce circa 2200 Emissions Reductions per MW installed per annum. Crediting period would be 3*7 years. Chile is now developing its own Carbon Market. This will increase the electricity price further, but will also provide significant demand from polluters for carbon offsets in order to reduce their compliance costs.
- Development of Solar Projects in Chile can be achieved at significantly lower cost than in Europe or The United States. Typically, in the UK, sites can be developed to a shovel ready point (ready to build) for circa £10,000 GBP per MW. On completion of shovel ready status UK sites are valued at around £100,000 per MW. Conversely, Chilean Sites can be developed at a cost of around £4,000 per MW ($6,500).
- Based on solar irradiation achieved by the sites and an electricity price of $155 per MWh, the selected sites produce Equity Only Internal Rates of Return (IRR) of 17.5% before international subsidy is taken into account. Based on engineering estimates, the sites can be built for $1.6M. Once completed, we anticipate the park’s value up at $2.6M per MW.
- Grue og Hornstrup A/s has operated a representative office in Santiago since 2004. Carbon 350’s project development team has been based in Santiago since 2011. As a result, in Chile, Solar 350 is partner- ing with a legal firm that twice provided Chile with its President and an industrial Electrical Contractor, who will handle all grid, substation and transmission line requirements. In order to retain confidentiality, we have omitted details of our team on the ground in Chile.
- Chile is designated as a Tier 1 Country and has a stable slightly left of centre government. GDP is growing at 6% per annum, interest rates are at 4%, its legal system is proven and reliable and its population is a mix of Spanish, Portuguese, German and English. As a result, Chile is currently favoured by many investors in Europe and The United States.