Financial Innovation Enables Scatec Solar to Launch Projects Worth Nearly $1 Billion

Innovative ways to raise capital, ranging from Islamic Green Bond to climate finance, has enabled Scatec Solar to launch 758 MW of clean energy projects on three continents – Asia, Africa and South America.

The approach to project financing adopted by the company differs, with uniquely designed solutions appropriate for the specific local conditions in Malaysia, Brazil, and Egypt. “Getting cost efficient capital is essential to deploy renewable energy to meet climate goals. I am very proud of our organization’s ability to innovate and deliver high value projects in new and different markets” said Raymond Carlsen, CEO of Scatec Solar.

With six projects totaling 400 MW, Scatec Solar is a leading solar energy player in Egypt, where the Benban solar installation upon completion will be the largest in the world. ‘’The range and number of financing parties adds to the complexity of the Egypt deal’’ said Mikkel Tørud, Scatec Solar’s CFO.

Scatec Solar’s financial partnerships with Development Financial Institutions (DFIs) and multilateral financial institutions has enabled the successful raising of capital.

Mercom recently reported that Scatec Solar ASA (SSO) and its partners closed financial deals for six solar photovoltaic (PV) power plants with an aggregate capacity of 400 MW in Egypt.

In Malaysia, financial innovation involves the issuance of the world’s largest Islamic Green (Sukuk) Bond of $237 million (~₹ 15.49 billion), providing 80 percent of the capex for Scatec Solar’s 197 MW photovoltaic projects. The projects constitute the largest Renewable Energy portfolio in South East Asia. This is the first time the company is raising money through a project bond.

The Islamic Green Bond is a financial instrument in Malaysia that has established frameworks for issuing Islamic bonds for infrastructure projects as well as the ambition to strengthen its position as a global hub for Islamic financing. “We want to explore and utilize financial structures that are optimal for each situation” explained Terje Pilskog EVP of Project Development & Project Finance.

With low and even negative interest rates on treasury bonds, Institutional investors who want long-term, stable investment see renewable energy projects as an attractive option.

The demand for green instruments has increased substantially since Scatec Solar issued its first Green Bond two years ago. Recently, the company successfully issued an unsecured corporate bond of NOK 750 million (~₹5.96 billion). ‘’Our green bond is this time with more attractive terms and green bond investors subscribed for a meaningful volume’’ said Tørud.

In Brazil, Scatec Solar’s financial strategies included signing its first ever JV with the Norwegian energy giant, Statoil, for its 162 MW Apodi Project. ‘’Statoil’s solid balance sheet and local presence and our competence in developing and building solar plants makes us a strong team to realize more projects,” said Pilskog.

The solar projects in Brazil, Malaysia and Egypt involving a total investment of $958 million (~₹62.63 billion) will together generate 1,500 GWh of electricity per year.