Jamaica has selected a Neoen-backed developer as preferred bidder in its tender for new renewable energy capacity in the country.
Eight Rivers Energy Company (EREC) has been chosen by the Office of Utilities Regulation (OUR) to build and operate a new 33.1MW solar PV plant at Paradise Park, in the west of the country. EREC – a partnership between French renewables group Neoen and London-based Rekamniar Frontier Ventures – won the reverse capacity auction with a proposed price of 8.54 US cents (£0.06 €0.08) per kWh of power produced, the lowest cost ever proposed for solar in Jamaica.
With an expected capex of US$45-50 million (£31-35m €40-44m), the plant's sponsors are now engaged in the financing process which is being targeted to
conclude in around 6-9 months, subject to finalising environmental consents and project agreements.
It is understood that multiple banks will be tapped for project finance debt, with a 70:30 debt-to-equity gearing targeted. FirstCaribbean, part of Canadian Imperial Bank of Commerce, has already begun participating on the scheme alongside development banks OPIC and FMO.
For EREC, much of the financial muscle and technical expertise will be provided by Neoen, while Rekamniar is more involved in a local development partner
mould.
The capacity tender is part of a continued initiative of the government of Jamaica to diversify the island's power supply. Currently, the country's energy mix is
dominated by imported oil and therefore vulnerable to price fluctuations.
OUR's latest auction had a stated aim to procure 37MW of additional renewable energy capacity, which is the amount EREC bid for, leaving some discrepancy
as to why only 33.1MW was awarded.
There has been no announcement as to whether another bidder also won with a smaller bid, although 18 further proposals were submitted featuring solar, wind,
hydro, waste to energy and biomass technologies.
The tender follows previous competitive procurements in Jamaica, commencing from 2012 and awarding around 80MW worth of projects.
One of the previous developments, the 36.3MW Blue Mountain Renewables wind farm, made it to financial close early last year [2015] with support from OPIC
and the IFC.
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