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Puerto Rico
The Yabucoa Solar Project is a 30 MW AC photovoltaic ("PV") project in Yabucoa, Puerto Rico. Energy and green credits from the Project will be sold to the Puerto Rico Electric Power Authority ("PREPA") under a 20-year Renewable Power Purchase and Operating Agreement ("PPA") that also provides for direct interconnection in close proximity to the project site. The Project is located on land leased from the Puerto Rico Land Authority (PRLA) for 40 years. The Company is currently in an advanced stage selection regarding the modules, inverters, tracker system, and construction and term financing.
The Company engaged Rabobank as its exclusive financial advisor to provide financial advisory services in connection with the potential placement of tax equity and debt financing for the Yabucoa project. The Company is currently in an advanced stage of obtaining project financing and is expecting to close financing in December 2011 with the intention of qualifying the project for the US Federal Government's 30% cash grant. The Company is currently finalizing construction/term loan financing and a cash grant bridge loan.
The Company has chosen Black & Veatch as the independent engineer for our Yabucoa Project. Black & Veatch has completed phase 1 of their engagement, i.e., an energy assessment and a positive clearance of potential fatal flaw issues.
The Company has identified all of the major permits and approvals of the various federal and local agencies that are currently required to construct and operate the project. We are in the advanced stages of obtaining all necessary land use permits, and all permits required for construction will be issued and in effect prior to starting construction. Permits required for operating the project will be obtained when appropriate.
On February 25, 2011, the Company signed a 30 MW solar PPA with PREPA for a term of 20 years commencing on the commercial operations date providing an energy payment and green credits payments. In July 2010, Puerto Rico enacted the island's first Renewable Energy Portfolio Standard (RPS) in an effort to spur renewable energy development. The RPS requires the PREPA to supply 20% of retail electricity sales from eligible "green energy" resources by 2035. The compliance schedule is as follows: 12% by 2015; 15% by 2020; and 20% by 2035.
On August 17, 2010, the Company entered into a 40-year land lease agreement with the PRLA. The Project site is located in the municipality of Yabucoa, in southeast Puerto Rico, approximately 45 miles southeast of San Juan and 2 miles inland from the Caribbean Sea. The site is a former agricultural site, surrounded by former and current brownfield industrial sites. The site is an irregular rectangle approximately 500 acres in size and located northeast of the town of Yabucoa and contains three water wells and no major buildings or improvements. The Company has leased the site, for an annual lease payment ranging from $57,000 in year 1 of operation to $220,000 in year 40, plus a royalty of 1% of net income after taxes.
The right to interconnect and the specific interconnection arrangements are incorporated in the PPA. PREPA is responsible for designating an interconnection point for the Project, and the Company is responsible for constructing and paying for the interconnection.
The Company has incurred development costs on this project for financing, consultants, environmental impact studies, engineering, design and transmission studies related to interconnection and feasibility studies.
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