La Castellana Wind Project

The Castellana wind power project (the “Project” or “La Castellana”) will add 99 MW of renewable energy to the Argentinean electricity system, thus directly supporting the Government of Argentina’s (“GoA”) priorities to ensure a stable long-term electricity supply and the diversification of its energy matrix with the expected addition of 2.7 GW from renewables sources by 2018. The project consists of the construction, operation and maintenance of a 99 MW wind farm, its associated facilities, a 132kV 45km transmission line and 15km of service roads, to be located south of the province of Buenos Aires, 36km northwest of the city of Bahia Blanca, Argentina. The Project will sign a 20-year power purchase agreement (“PPA”) with the wholesale electric market administrator (“CAMMESA”) to inject energy to the national interconnection system (¨SADI¨) via the 132 kV Chañares substation, at a bidding price of US$61.50/MWh increased annually by an adjustment factor. Electrical studies were presented to the relevant authorities, which provided a favorable opinion to the Project´s interconnection specifications for the assigned node. The Borrower is expected to enter into an EPC contract covering civil and electromechanical works, and a turbine supply agreement for the turbines from a first-tier manufacturer and a long-term O&M contract. It has an estimated 18-month construction period, with construction starting by the first quarter of 2017. Wind resource has been assessed by DNV GL based on on-site wind measurements from October 2012 to March 2016, with average wind speeds of 8.6m/s at 81m hub height. The Project has a capacity factor of 50.6% and estimated annual energy production at P50 of 439.5GWh/year.

Transaction Structure and Financing Highlights. The estimated total cost of the Project is of up to US$200 million, which will be financed through an IDB Group loan of up to US$50 million. The financial plan will be completed with the participation of a multilateral organization or export-credit agency as well as equity contributions for a 75/25 debt-to-equity ratio. The project will be required to meet the customary sizing criteria applied to wind projects, DSCR 1.30x for P9010-years and 1.00x for P991-year. The IDBG loan is expected to have a tenor of up to 15 years door-to-door. The project will have the security package customary for this type of project finance transactions.

Development Impact. The Project will have positive developmental impacts, such as: (i) adding 99 MW of renewable capacity to the Argentinean grid, representing 15% of the total current NCRE installed capacity, thus decreasing thermal and hydro generation reliance and contributing to the 20% goal of NCRE by 2025; and (ii) displacing approximately 216,234 equivalent tons of carbon emissions per year. Financial additionality is strong as the tenor of the financing is 15 years door to door, a long tenor that is critical for the financial viability of this type of infrastructure projects, and which is simply not available in the local capital markets. Commercial banks have not structured project financing transactions in Argentina for the last 10 years and hence the participation of multilateral and bilateral agencies in this first round of the RenovAR program will be key to its success.