Solar power provides stable, reliable and predictable energy generation over the life of the asset. It is the premise behind Ampyr Solar Europe’s ambition to become the leading solar independent power producer in Northwest Europe. By Nick Herbert
Ampyr Solar Europe (ASE) is building an organisation focused on achieving scale for the renewable energy transition. It has chosen solar as its primary focus. Operating across the entire solar power lifecycle in the key European markets of Germany, UK and the Netherlands, the next major target on its way to realising its aspirations is growing the business to achieve 1GWp of assets in construction and operation during 2025.
“If you look at the energy transition today, then the primary source of renewable energy comes from solar. It is the mainstay,” said Tarun Agrawal, CEO of ASE. “And the primary reason for that is the reliability of solar technology. That is important when you're underwriting plans over a period of 35–40 years.”
As well as the reliability of its tried and tested technology, the appeal of solar to ASE is the pace at which projects can be developed. It has built its organisational structure around the project timeframe.
“Solar project development takes anywhere from 12 to 18 months, and the business is built on that basis,” said Agrawal. “That's what sets the pace of the organisation. Instead of confusing the structure, we wanted to focus on solar to begin with as far as reaching the scale to provide 1GWp is concerned.”
It is currently at the point of generating 400MWp per year and should be adding another 600MWp during the next year to reach its 1GWp target through solar PV plants and co-located batteries.
Sunrise
ASE was created in 2021 through the incorporation of NaGa Solar into the existing Ampyr Energy UK joint venture between AGP Sustainable Real Assets and Hartree Partners.
AGP is a Singapore-based asset manager with a mandate to develop, invest, manage and operate sustainable real assets. “That is the asset part of our story,” said Agrawal. The second part of the joint venture is Hartree Partners.
“The idea was that as renewable energy assets came off the feed-in tariff regime into a more corporate PPA market, by combining the capability of AGP, the development and operations side of the asset, with Hartree Partners, which was more about power trading and power market expertise, we could position the firm with a unique USP.”
The incorporation of NaGa Solar, an experienced Netherlands and Germany-based project developer and general contractor for large photovoltaic systems, was the next step for ASE. NaGa’s approach was built on developing long-term and trusting partnerships with land lessors, municipalities, industry, commerce, utilities and investors.
The assimilation of NaGa’s philosophy alongside the experience of AGP and Hartree has shaped ASE into becoming a fully functional, integrated IPP with the end-to-end capability to “engage with landowners, procure engineering, construct the projects, and manage a set of operating assets”, said Agrawal. “We have teams that can manage the commercial side and we also have the capability to finance projects, set up the project financing, and engage with capital markets.”
ASE’s team has grown rapidly since the company’s establishment and currently numbers around 120, split between five offices in London, Frankfurt, Berlin, Maastricht and Utrecht.
“We are fairly stable from a people perspective in the sense that we currently have the capability to deliver 700MWp to 800MWp of assets annually and ensure that the first gigawatt of energy from our projects gets delivered over the next 12 months,” said Agrawal.
Project progress
In 2021, ASE won Edinburgh Airport's tender to provide solar energy as part of the airport's Greater Good sustainability strategy goal to generate 27% of its energy needs from renewable sources. At the time of commissioning, it was the largest airside solar farm in the UK. It is a 9.7MWp project with 1.5MW of battery storage. The project also included a new incoming substation upgrade for the airport along with 40 EV chargers. The project was underwritten by a 20-year fixed price PPA.
Elsewhere in the UK, its project in Poppleton, near York, will deliver 32MWp. In 2023, it completed construction of its first three solar farm projects in the Netherlands. Echt-Susteren, Venray and Tinte are operational with combined generation of over 20MWp. Another 95MWp solar plant is expected to be operational by the second quarter of 2025 in Noordermeerdijk.
In Eastern Germany, its Saxony and Brandenburg solar projects will provide almost 200MWp of renewable energy to the region.
Challenging times
ASE points to a variety of challenges it has faced over its short history. Hiring has proved to be a significant issue.
“With the expansion of the renewable energy sectors, finding the right people who match our pace of organisation, development, growth and ambition is difficult,” said Agrawal. “It is one thing to attract talent into an organisation but it's a totally different challenge to keep talent motivated towards the organisation’s goals and their own personal development.”
It has overcome the challenge by hiring from its peers, developing young talent straight from university and with the establishment of an offshore centre in New Delhi. Retaining talent comes from an emphasis on personal development. “We see personal development and company development as a balance that you constantly strive for to ensure people are motivated towards achieving their own personal targets and also the company's targets,” he said.
The next challenge is around permissioning and regulation. Dealing with these challenges requires an interface with a wide variety of stakeholders: the local community, regulatory agencies, construction companies, the grid, and landowners. “Multiple stakeholder engagement means multiple opinions and so we have taken a ‘carry the community with us’ approach,” said Agrawal. “We see the whole permitting process as a stakeholder engagement programme which has to run in parallel with our technical capability.”
The need to engage effectively with stakeholders has determined the way ASE has been built organisationally. “We have the full suite of capability internally, whether it is the people who engage with the community, the principal architects who come from a technical perspective, or the engineers,” said Agrawal. “Hence our engagement with the community, our ability to address and respond to community requirements, to different stakeholders, is much quicker.”
In the Netherlands, for example, where the local community wants significant ownership of projects, it has provided the financial structure to ensure communities own up to 50% of a project. Where the community has not been able to put up the capital, ASE has provided soft loans to enable its participation. “We have also worked with landowners who might have specific requirements in how they wish to see land being developed,” said Agrawal.
With the solar park in Echt-Susteren, for example, the land remains dedicated to agri-photovoltaics through a combination of vegetation and solar panels, allowing the landowner to combine agriculture with sustainable energy production.
The general market was another issue. In recent years, macroeconomic conditions have created volatility in the availability of capital, the supply chain, and the power market.
“Taking a project to operation over a four-year period when you don’t know its viability has been a key challenge,” said Agrawal. “Our view is very simplistic as we believe that renewable energy is the future. Whether a particular project is viable depends on multiple factors, but if the quality of the project is in the top quartile of projects around the region, then it will be viable.”
Connecting to the grid is also a dynamic element. “Grid is a constant topic for us,” said Agrawal. “Connecting in the UK used to be extremely difficult but in recent months there has been some positive movement in grid connectivity where solar is concerned. The Netherlands used to have a favourable grid connectivity regime, but that has more recently become very difficult. Likewise, Germany is getting a little harder.”
Capital intensive
Developing solar plants is capital intensive. To finance its initial target of developing 1GWp of installed solar PV capacity, ASE established a €400m debt facility at the holdco level with private credit provider AB CarVal. CarVal made available an initial €250m tranche as well as a further incremental tranche of €150m which predominantly covers the organisational SG&A of ASE, the development expenses – surveys, land agreements, engagement, and all the work other than construction.
“The holdco facility was established in early 2022, during a pretty favourable interest rate environment,” said Agrawal. “We were fortunate to get the facility at the right time and one long enough to tide us over the subsequent interest rate bulge.” The four-year facility comes with an option to extend by one year, taking ASE well into 2027. There has been no decision as to whether ASE will take up the option to extend.
In addition, ASE has two banking relationships: one with Rabobank – a €200m facility, and the second with Nord LB – a €250m facility. They are project finance facilities, financing the construction of the project. “The decision as to whether to draw on the bank facilities is done on a project-by-project basis,” said Agrawal.
“So, the cost of any particular tranche for any particular project depends on when we close the project. And, at that stage, we want to make sure that revenues and cost of capital balances out so that the returns on equity are maintained and stable.”
The focus on stable equity returns means ASE has, on some projects, chosen to wait a little longer before going into construction or accelerated construction depending on what it sees on the EPC construction cost or the power markets.
“Equity returns for a solar project will typically equate to a spread of around 400bp to 500bp to base rates,” said Agrawal. “That is typically a minimum threshold for underwriting projects.”
Expanding horizons
Although ASE’s immediate focus is achieving the 1GW target, its longer-term direction revolves around geographical expansion and different technologies.
“We have options to diversify across multiple technologies and geographies,” said Agrawal. “We have kept very focused on only three countries for now, but our ambition is much larger geographically. We have also taken a very disciplined approach in concentrating our first efforts on solar and co-located batteries.”
Within electrons, it sees opportunities in wind technology and standalone batteries, for example. And beyond electrons, it has eyes on hydrogen or ammonia molecules – or any other form of renewable energy. “The whole energy transition is about how to find the most free molecule,” said Agrawal.
“Within the AGP Group there is enough know-how and expertise to go into multiple technologies. It would be low-hanging fruit for us.”
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