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Dubai 950MW NOOR Energy 1 CSP+PV Project Financing Briefing [Total investment of about USD 4.4 billion]

2022.07.13     From:


In recent years, the participation of Chinese enterprises in overseas CSP projects has become more and more intensive, and the pace of "going out" of China's CSP industry chain has accelerated. At the same time, China's green financial system is growing rapidly and has become an important contributor, promoter and beneficiary of global green financial development.


In recent years, the participation of Chinese enterprises in overseas CSP projects has become more and more intensive, and the pace of "going out" of China's CSP industry chain has accelerated. At the same time, China's green financial system is growing rapidly and has become an important contributor, promoter and beneficiary of global green financial development.


The project is the fourth phase of the Muhammud Solar Park in Dubai, containing 700MW CSP and 250MW PV, including 600MW Parabolic Trough CSP plants (3×200MW) and 100MW Molten Salt Tower CSP Plant. Borrower NOOR ENERGY P.S.C is mainly responsible for the investment, construction and operation of this project, and is a bidding consortium formed by ACWA Power and Silk Road Fund, jointly financed with DEWA in the ratio of 49% and 51%.


UAE is an important economic and trade partner of China in the Middle East. The Dubai CSP Project built by Sino-Arab cooperation is the largest and most technologically advanced CSP plant in the world. The total investment of this project is about USD 4.4 billion, and Shanghai Electric (601727), as the general contractor of the project, has an EPC (Engineering Procurement Construction) contract with a total amount of about USD 3.3 billion. This is a solid step forward for Chinese enterprises in the international medium and high-end clean energy field. Among them, the total amount of senior debt of the international syndicate is about USD 2.43 billion, and Bank of China as the co-lead bank undertook a loan of USD 600 million and matched the corresponding share of funding business.


According to the introduction, the main body of the project is highly globalized, among which the main borrower is the project company established in Dubai, the owner includes DEWA, ACWA Power and Silk Road Fund, the EPC is Shanghai Electric, and the equipment and technology provider also involves companies from the United States and Spain. Bank of China gave full play to its globalization advantages and, under the unified arrangement of the head office, the Shanghai branch, the local institution of the main contractor Shanghai Electric, acted as the internal lead bank, linking up with the Dubai branch and other branches to participate in the loan, and quickly promoted the project due diligence, internal approval, text negotiation and financing closure to meet the financing needs of this complex project.


In view of the large amount of project financing, long loan term and complex transaction structure, Bank of China has actively innovated green finance solutions and made certain breakthroughs in loan term and guarantee structure, enhancing the service capability and risk prevention level of domestic banks to participate in international competition and increasing the openness of financial institutions.


As to the Loan term, with reference to the international financing practice in the Middle East, we adopt a non-recourse project financing model with a maximum term of 27 years (4-year drawdown period + 23-year repayment period) under the premise of ensuring risk control, so as to minimize the pressure of early repayment for power plant-type public utility projects. At the same time, after the project enters repayment period, the non-compulsory early repayment mechanism (SOFT MINI PERM) of "cash clearing and accelerated repayment" is adopted to balance the "shortening of loan term by the syndicate" and "reduction of refinancing risk by the owner" as much as possible. 


As to the guarantee structure, the project signed a 35-year USD-denominated power purchase agreement and the payment obligation is guaranteed by the Dubai government, which means that the project development risk can be controlled and the cash flow is stable and predictable.


This project includes two parts: CSP and PV. Among them, the technical requirements of CSP are high, the traceability is short and the construction risk is high. At the same time, the prognosis of solar resources and power generation requires objectivity and reasonableness. In order to effectively assess and manage the project risks, the syndicate hired a triad of financial advisors, technical advisors and legal advisors with rich experience in the relevant fields to make reasonable estimates of completion risks, solar parameters and power generation capacity, so as to effectively identify and manage the project risks.


The project, as the world's lowest-priced CSP project, is expected to have the same comprehensive power generation cost as traditional coal-fired power plants, providing a model solution for cost control of renewable energy power generation. The project deepens international energy cooperation, seizes energy opportunities, actively promotes the international development of Chinese enterprises, and makes a significant contribution to the construction of a clean, low-carbon, safe and efficient international energy system.


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