Who would want Abengoa’s assets?

Abengoa bankruptcy: Who might buy the company's CSP plant assets in Chile, South Africa and the USA, or invest in Abengoa Yield? Photo: Mojave Solar Project, Abengoa

Abengoa bankruptcy: Who might buy the Spanish company’s CSP plant assets in Chile, South Africa and the USA, or invest in Abengoa Yield? Photo: Mojave Solar Project, Abengoa

By Jason Deign

Abengoa, the Spanish renewable infrastructure developer, is thought to be hunting buyers for assets, including a large amount of storage, as it faces bankruptcy.

The company filed for preliminary creditor protection a fortnight ago after failing to secure funds from investors led by Gonvarri Corporación Financiera. It now has four months to secure an agreement with creditors.

Given scale of the business, which employs 7,000 people in Spain and many more abroad, it is possible the company might be bailed out by whichever party wins general elections in Spain this December 20.

In any event, however, it seems likely the business will be forced to sell much of its project portfolio to offset debts that may amount to more than €20bn.

According to data from Abengoa’s website, that portfolio includes a total of 27 hours of molten salt storage tied to some 360MW of solar thermal plant generation, spread across three projects in South Africa and one in Chile.

Molten salt storage

Another plant, the 280MW Solana parabolic trough project in Arizona, USA, has six hours of molten salt storage and belongs to Abengoa Yield, a yieldco asset holding company that is 50% owned by Abengoa.

Apart from these storage assets, Abengoa is known to have been investigating batteries for hybrid solar thermal-PV plants such as Atacama 1, a 210MW project in Chile.

And earlier this year the company’s US subsidiary was planning to sell molten salt storage as a standalone alternative to gas peaker plants, although no further announcements have been made in this direction.

The question now is who might be interested in taking on these projects. And the answer is not obvious. Abengoa does not have a storage business as such.

Plus its storage assets are pretty much all based on molten salt and integrated into solar thermal (also called concentrated solar power or CSP) plants.

Of interest to traditional players

That means they are unlikely to be of interest to traditional storage players with experience in batteries, compressed air or other technologies.

In fact, given the relatively complexity and immaturity of solar thermal and molten salt combinations, it is unlikely Abengoa’s plants could realistically be picked up by any company that is not already a CSP player.

There are not many of them around.

Despite the fact that CSP with molten salt is still more cost-effective than PV with batteries, the high capital cost of solar thermal plants has made it difficult for developers to find funding for projects in recent years.

Early market leaders in the field, such as Spain and the US, have now gone sour on the technology.

Development cash still available

Abengoa and other CSP players have been switching their attention to places such as Chile, the Sahara and South Africa, where development cash is still available and radiation levels make solar thermal particularly effective.

Along the way, however, a large number of companies have dropped out of the race. The list of CSP has-beens includes Areva, Bosch, Infinia, Siemens, SkyFuel, Solar Millennium, Sopogy and many more.

In fact, by now it would be fair to say Abengoa is part of a select group of just three companies worldwide that have a track record in large-scale CSP plant development along with a sizeable pipeline of new projects.

The other two in this group are both US players: BrightSource and SolarReserve.

From a market and technology perspective, SolarReserve might be said to be closest to Abengoa, since it is active in Chile and South Africa and has prior experience in molten salt storage development.

Financial muscle to acquire plants

BrightSource, on the other hand, is pursuing projects in Israel and China, and is only now beginning to incorporate storage into its plants.

Neither player, however, is thought to have the financial muscle to start acquiring plants without the involvement of a major external investor.

Another option for Abengoa might be to sell its upcoming solar thermal plants to Abengoa Yield. That was the reason Abengoa set up the yieldco in the first place.

However, yieldco investors want the assurance of steady returns from existing infrastructure projects and would not be willing to finance plants that have not been finished yet.

That means Abengoa Yield would have to find a suitable engineering, procurement and construction partner if Abengoa itself cannot finish the job. And Abengoa Yield itself is hardly on solid footing at the moment.

The company took a battering on the stock market over the summer, as US yieldcos in general suffered an investor backlash.

Wanting to sit tight

It needs to find a buyer for the 50% stake that Abengoa still holds and has indicated it might want to sit tight with its current portfolio until the yieldco market stabilises.

With these obvious choices out of the picture, one other potential buyer that cannot be ignored is ACWA Power International, a Saudi Arabian developer that has been quietly building a presence in the CSP market.

In 2013 the company bought Flabeg, a CSP mirror maker. It is currently leading the Noor 1 project at Ouarzazate in Morocco, along with Bokpoort in South Africa.

Drawing on Saudi petrodollars, ACWA might be able to access cash more easily than its US counterparts.

Plus it has already shown an affinity for Spanish companies, having partnered with Spain’s Sener, Acciona and TSK for its projects so far. Whether it figures Abengoa’s estate is worth making a play for remains to be seen, of course.

But if it does, it probably won’t face much of a queue.

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