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Scatec signs 15-year power purchase agreement for a solar plant in Colombia

Norwegian group Scatec has signed a power sales agreement with BTG Pactual for its first solar project in Colombia, representing an estimated $110mn investment.

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Norwegian energy solutions producer Scatec ASA has signed a 15-year Power Purchase Agreement (PPA) with BTG Pactual Comercializadora de Energía, an energy trading subsidiary of Brazilian banking group Banco BTG Pactual S.A. The contract will cover about 85% of the estimated output from a 130-megawatt (MW) solar plant, with the remainder to be sold on the Colombian electricity market.

The plant will be located in the department of Nariño, just over 100 kilometres west of Bogotá. This project marks Scatec’s first entry into the Colombian market, supported by favourable regulatory conditions, strong local demand for renewable energy, and high solar irradiation levels. Colombia is expected to add more than 5 gigawatts (GW) of solar capacity over the next five years, according to official projections.

A contract indexed to local inflation

The PPA will be denominated in Colombian pesos and adjusted according to the country’s Producer Price Index. This mechanism will allow Scatec to limit its exposure to economic fluctuations while ensuring predictable revenues over the term of the agreement.

The total capital expenditure (capex) of the project is estimated at $110mn. Scatec will handle the Engineering, Procurement and Construction (EPC), representing about 80% of total capex. The company will also provide Operations & Maintenance (O&M) and Asset Management (AM) services for the plant.

A structured financing and an institutional partner

The financial structure is based on a combination of equity and non-recourse financing. Scatec will retain a majority stake in the project, while Norwegian public financial institution Norfund will act as a minority equity partner. The company is currently in advanced discussions with several financial institutions to finalise project debt financing, with a targeted leverage of 65%.

Financial close and construction start are expected in 2025. This project is part of Scatec’s international expansion strategy, targeting markets with strong energy demand growth and a regulatory framework conducive to private investment.

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