26 March 2024

BBVA leads the financing of the San Martín solar project (Peru) to Solarpack

This is the first photovoltaic project financed under a project finance structure in Peru for more than a decade.

BBVA, as MLA/bookrunner, has closed a financing package with Solarpack Corporación Tecnológica S.A.U., a global renewable energy company based in Spain, for the San Martín photovoltaic solar plant in Peru. This project is a milestone for the bank as the first photovoltaic project to receive financing under a project finance structure in more than a decade in the country, and will also be the largest solar plant in Peru.

The syndicated financing, with the involvement of another three leading banks, has also been classified as a green loan by Solarpack's Green Financing Framework, which is in accordance with the Green Loan Principles, established by the Loan Market Association (LMA), and which identify all initiatives that promote environmental sustainability.

This senior loan stands at US$159 million, along with two US$17 million guarantee facilities and IRS hedging. As part of the senior financing package, BBVA has closed a revolving financing facility of 70 million soles (equivalent to US$19 million) with San Martín, which will be used to pay the General Sales Tax (IGV) generated during the project's construction.

The San Martín solar plant, with an installed capacity of nearly 300 MW, reflects Solarpack's commitment to renewable energy, and contributes significantly to the diversification of Peru's energy matrix. By generating more than 819 GWh per year, this plant will provide clean energy equivalent to the annual electricity consumption of more than 444,000 homes, while avoiding the emission of more than 564,000 tons of CO2 every year.

Also, the innovative contractual scheme implemented is a milestone in Peru, since it provides a solution from the private sector to a regulatory limitation that difficults the execution of solar plants. Solar represents  only 2% of the total installed capacity, albeit Peru is paradoxically one of the countries with the largest solar resource in the world.

"The closing of this financing process demonstrates once again the trust large financial institutions with an international profile place on Solarpack's business model, management and solvency," said Luis Alvargonzalez, Chief Financial Officer at Solarpack.

"This project represents a significant milestone for BBVA, Solarpack and Peru, marking our commitment to innovation in the energy sector. By collaborating in the financing of the San Martín solar plant, we strengthen the diversification of Peru's energy matrix. This initiative reflects our belief in the transformative power of renewable energy and our ongoing commitment to global climate action," said Carlos López Rabadán, Head of Project Finance for South America at BBVA.

The collaboration between BBVA and Solarpack on this project not only strengthens the development of renewable energy in Peru, but also demonstrates the joint commitment of both entities to the energy transition and the fight against climate change. With the commissioning of the San Martín solar plant, Solarpack reaffirms its commitment to promoting renewable solutions for its customers in the countries where it operates, while BBVA continues to lead the way toward a greener economy, promoting the financing of initiatives aligned with the SDGs and sustainable development.