A group led by Masdar of Abu Dhabi has secured more than US$600 million (Dh2.2 billion) of financing to build the UAE's first utility-scale solar power project, which would be among the biggest of its kind in the world.
This marks the largest solar project financing to date, said the Shams Power Company, a joint venture between Masdar, France's Total and Spain's Abengoa.
The deal combines financing from eight foreign and two local banks led by BNP Paribas of France, the financial adviser for the transaction.
The 22-year loan agreement for the 100-megawatt Shams-1 concentrating solar power plant is "a groundbreaking financing for a landmark deal", said Derek Rozycki, the executive director of structured finance and capital markets at Mubadala Development, a strategic investment company owned by the Abu Dhabi Government and the parent of Masdar.
"We will continue to leverage our extensive expertise in international capital markets and our knowledge of the region to support these types of leading-edge financing deals," Mr Rozycki said.
Shams Power said the financing was oversubscribed, with commitments totalling $900m. The two local banks in the syndicate, National Bank of Abu Dhabi and Union National Bank, underwrote $68m and $41m, respectively.
Other banks in the consortium include Japan's Bank of Tokyo-Mitsubishi, Sumitomo Mitsui Banking and Mizuho; France's Natixis and Societe Generale; and Germany's KfW and WestLB.
The project also received a $153m equity boost from its foreign partners, Reuters said, citing bank sources.
Masdar holds a 60 per cent stake in the Shams Power consortium, while Total and Abengoa hold 20 per cent each.
The Shams-1 project, which is likely to be the Middle East's biggest renewable energy project when completed towards the end of next year, is being built near Madinat Zayed in Abu Dhabi's western desert. "We are on schedule and the work is going well," said Philippe Boisseau, the president of Total's gas and power unit.
The Shams-1 plant is designed around technology developed by Abengoa. Mirrors lining rows of sun-tracking parabolic troughs will concentrate sunlight on a central boiler to generate high-pressure steam. The steam will drive turbines to generate electricity.
The power plant's 768 parabolic sunlight "collectors" will cover an area of 2.5 sq kms, creating a solar field capable of generating 100mw of power under ideal conditions.
Masdar also plans a second large-scale solar project, Noor-1, which will use photovoltaic panels incorporating semiconductors that convert sunlight directly into electricity.
The company has issued a request for qualification to prospective project developers. Companies have until the middle of this month to respond, and Masdar is expected to invite bids for the main engineering, procurement and construction project by early May.
The Noor-1 plant is to be built at a site east of Al Ain, the second biggest city in the emirate of Abu Dhabi. Completion is expected in the third quarter of 2013.
Germany's Lahmeyer International is the project's technical adviser.
Progress on the two power projects follows the delay of Masdar's plan to build a $2.2bn hydrogen-fuelled power plant, after its partner BP quit the project, and its scrapping of a scheme to build a solar-module factory in Abu Dhabi.