Arroyo and Natixis close PMGD financing of solar PV projects in Chile
ARCO 3 SpA (“ARCO”) and Natixis have successfully closed senior facilities totaling US$69.1 million for the up-to-70MW portfolio of solar PV plants in Chile (the “ARCO Solar PMGD Portfolio”). ARCO is wholly-owned by affiliates of Arroyo Energy Investors, an investor in energy projects throughout the Americas. This marks the first PMGD loan portfolio term financing arranged by Natixis, and one of the first ones in the international project finance market.
The ARCO Solar PMGD Portfolio will consist of assets operating under Chile’s special regime for distributed generation projects (the “PMGD” regime). PMGD projects are entitled to be remunerated for their
generation at a regulated stabilized price. The proceeds of the transaction are being used to finance solar PV projects. The financing structure provides ARCO with the flexibility to add additional solar PV PMGD projects to the portfolio, subject to meeting defined eligibility criteria.
Natixis acted as Sole Lead Arranger, Hedge Provider, and Administrative Agent and Natixis provided a firm underwriting for 100% of the transaction.
The PMGD regime was created in 2005 with the goal of facilitating access to small distributed generation with units of up to 9 MW. ARCO and Natixis are of the view that PMGDs based on renewable energy provide fundamental value to the Chilean electricity system, and both continue to play an active role in the PMGD space. The core benefits to Chile of the projects under the PMGD regime include:
- Enhancing the electricity grid’s efficiency by enabling the distribution of energy close to residential demand centers, in many cases small towns;
- Contributing to the decarbonization of the Chilean energy mix;
- Increasing the number of players and therefore the competitiveness of the energy sector; and
- Contributing to economic growth of various small towns by hiring local services and suppliers during construction and operation of these plants.
Through ARCO, Arroyo has an increasingly strong presence in the Chilean electricity market. In addition to its ARCO Solar PMGD portfolio, ARCO wholly owns the 115 MW Arrayán wind project and the 104 MW Conejo solar project, and a 22 MW wind PMGD portfolio.
Arroyo Energy Investors is an independent private equity firm that focuses on investing in energy infrastructure assets in the power generation and midstream space in North and South America. Arroyo Energy Investors has offices in The Woodlands, Texas and Santiago, Chile.