- Country: Cayman Islands
- Industry: Energy, Natural Resources, Mining
- Stage: Seed
- Investment size: $1,200,000 / min. $30,000
Investment opportunity in solar power production. This project will take advantage of high feed-in tariff in the Caribbean market and lower costs of solar panels because of a current manufacturing oversupply. Generated power will be sold to CUC under a 20-year power purchase agreement.
This project will implement solar power panels on rooftops of residential and commercial buildings under long-term leases, escaping the issues of land use and environmental concerns and easing connections to the power grid. Energy Engineering Corp (EEC) will also benefit from what photovoltaic industry analysts predict will be the low cost of solar panels through 2012-2013 because of overproduction.
Photovoltaic power installations have greatly increased in the past decade due to demand and concerns over fossil and nuclear fuels. By partnering with local solar power companies and working with the programs of local government, EEC stands in a unique position to undertake this energy project. This PPA has an annual escalation clause based upon the increase in wage rates in Cayman Islands. This opportunity has the following advantages:
1.Solar technology is proven and entails no significant operating risks.
2.The power will be sold under a long term PPA to CUC, a state-power generator and distributor in Cayman a very stable utility listed for trading in United States dollars on the Toronto Stock Exchange under “CUP.U”.
3.The completion period of this project is comparatively short as solar panels are readily available and are easy to install.
4.To avoid any unnecessary delay due to environmental issues, the solar panels will be installed on rooftops of residential and commercial buildings near major centers.
5.The strength of the long term PPA will provide the project with an attractive capital structure that will maximize the return on equity (ROE)
6.The power rate offered by CUC and the capital structure will generate attractive cash flows and ROE with limited risk.
7.There is presently an oversupply of solar panels which has lowered their prices.
EEC will secure rooftop sites required to meet targeted project solar power and subsequently will provide administrative services. Caribbean companies working in solar power industry have been retained. These companies, in association with EEC will be responsible for the installation and maintenance of the solar facilities.
These partners have already implemented several MWs of rooftop projects in other islands (Martinique, Guadeloupe & Reunion), greatly reducing installation risks and allow the project to move ahead rapidly once the financing is in place.
These rooftop spaces will be leased under long-term agreements matching the length of the PPA. Multiple kW scale solar projects will be grid-connected using power inverters.
The feed-in tariff at US$0.44/kWh will generate very good ROE. 20-year Power Purchase Agreements will be signed with local utility Caribbean Utility Corporation strong financial organization: www.cuc-cayman.com
Rationale for the deal
Cost for solar equipment is trending down due to overproduction and the tariff has an escalation rate to be defined in the coming weeks. The tariff at US$0.44 has been agreed by the Cayman Government as minimum tariff.
Use of financing
The minimum investment of US$30,000 is needed for signing renting agreements for rooftop owners with the “Cayman CORE Credit Agreement for customer”. This document will be deposited to local utility for allocating solar power of each project into the Cayman program limited to 1000kW.
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