v3.21.2

Nature of the business | 6 Months Ended
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Jun. 30, 2021
Nature of the business [Abstract] |
Nature of the business | Note 1. - Nature of the business Atlantica Sustainable Infrastructure plc (“Atlantica” or the “Company”) is a sustainable infrastructure company that owns, manages and invests in renewable energy, storage, efficient natural gas & heat, transmission lines and water assets focused on North America (the United States, Canada and Mexico), South America (Peru, Chile and Uruguay) and EMEA (Spain, Algeria and South Africa). Atlantica’s shares began trading on the NASDAQ Global Select Market under the symbol “ABY” on June 13, 2014. The symbol changed to “AY” on November 11, 2017. Algonquin Power & Utilities Corp. (“Algonquin”) is the largest shareholder of the Company and currently owns a 44.2% stake in Atlantica. Algonquin’s voting rights and rights to appoint directors are limited to 41.5% and the difference between Algonquin´s ownership and 41.5% will vote replicating non-Algonquin’s shareholders’ vote. During 2020, the Company completed the following acquisitions:
| - | On April 3, 2020, the Company made an initial investment in the creation of a renewable energy platform in Chile, together with financial partners, where it owns approximately a 35% stake and has a strategic investor role. The first investment was the acquisition of a 55 MW solar PV plant (“Chile PV 1”). The Company’s initial contribution was approximately $4 million. In addition, on January 6, 2021, the Company closed its second investment through the platform with the acquisition of a 40 MW solar PV plant (“Chile PV 2”). This asset started commercial operation in 2017 and its revenue is partially contracted. The total equity investment for this new asset was approximately $5.0 million. The platform intends to make further investments in renewable energy in Chile and to sign PPAs with credit worthy off-takers.
| - | In January 2019, the Company entered into an agreement with Abengoa (references to “Abengoa” refer to Abengoa, S.A., together with its subsidiaries, or Abenewco1, S.A. together with its subsidiaries, unless the context otherwise requires) for the acquisition of a 51% stake in Tenes, a water desalination plant in Algeria. Closing of the acquisition was subject to certain conditions precedent, which were not fulfilled. In accordance with the terms of the share purchase agreement, the advance payment made for the acquisition was converted into a secured loan to be reimbursed by Befesa Agua Tenes, the holding company of Tenes, together with 12% per annum interest, through a full cash-sweep of all the dividends to be received from the asset. On May 31, 2020, the Company entered into a new agreement, which provides the Company with certain additional decision rights, a majority at the board of directors of Befesa Agua Tenes and control over the asset.
| - | On August 17, 2020, the Company closed the acquisition of Liberty’s equity interest in Solana. Liberty was the tax equity investor in the Solana project. The total equity investment is expected to be up to $285 million of which $272 million has already been paid. The total price includes a deferred payment and a performance earn-out based on the average annual net production of the asset in the four calendar years with the highest annual net production during the five calendar years of 2020 through 2024.
In December 2020, the Company reached an agreement with Algonquin to acquire La Sierpe, a 20 MW solar asset in Colombia for a total equity investment of approximately $20 million. Closing is expected to occur after the asset reaches commercial operation, currently expected to occur in the third quarter of 2021. Closing is subject to conditions precedent and regulatory approvals. Additionally, the Company agreed to invest in additional solar plants in Colombia with a combined capacity of approximately 30 MW. In January 2021 the Company closed the acquisition of 42.5% of the equity of Rioglass, a supplier of spare parts and services in the solar industry, increasing its stake to 57.5%. In addition, on July 22, 2021 the Company exercised the option to acquire the remaining stake of 42.5%. The investment made in 2021 to acquire the additional 85% equity, resulting in a 100% ownership, has been approximately $17.1 million (Note 5). The Company initially classified the investment as held for sale in the Consolidated Condensed Interim Financial Statements for the period ended March 31, 2021. Nevertheless, the accounting requirements of IFRS 5, Non.current Assets Held for Sale and Discontinued Operations, to classify the investment as held for sale are no longer fulfilled given that the sale is no longer considered highly probable. Accordingly, as prescribed in IFRS 5, the investment has been fully consolidated from the acquisition date in January 2021. On April 7, 2021, the Company closed the acquisition of Coso, a 135 MW renewable asset in California. Coso is the third largest geothermal plant in the United States and provides base load renewable energy to the California Independent System Operator (California ISO). It has PPAs signed with three investment grade off-takers, with a 19-year average contract life. The total equity investment was approximately $130 million (Note 5). In addition, on July 15, 2021, the Company paid an additional amount of approximately $40 million to reduce project debt. On May 14, 2021, the Company closed the acquisition of Calgary District Heating, an approximately 55 MWt district heating asset in Canada for a total equity investment of approximately $22.5 million (Note 5). Calgary District Heating has been in operation since 2010 and represents the first investment of the Company in this sector, which is recognized as a key measure for cities to reduce emissions by the UN Environment Program. The asset provides heating services to a diverse range of government, institutional and commercial customers in the city of Calgary. On June 16, 2021, the Company acquired a 49% interest in a 596 MW portfolio of wind assets in the United States (Vento II) for a total equity investment net of cash consolidated at transaction date of approximately $180.7 million (Note 7). EDP Renewables owns the remaining 51%. The assets have PPAs with investment grade off-takers with five-year average remaining contract life. The following table provides an overview of the main contracted concessional assets the Company owned or had an interest in as of June 30, 2021:
Assets | Type | Ownership | Location | Currency(9) | Capacity (Gross) | Counterparty Credit Ratings(10) | COD* | Contract Years Remaining(16)
Solana | Renewable (Solar) | 100% | Arizona (USA) | USD | 280 MW | A-/A2/A- | 2013 | 22
Mojave | Renewable (Solar) | 100% | California (USA) | USD | 280 MW | BB-/WR/BB | 2014 | 18
Chile PV 1 | Renewable (Solar) | 35%(8) | Chile | USD | 55 MW | N/A | 2016 | N/A
Chile PV 2 | Renewable (Solar) | 35%(8) | Chile | USD | 40 MW | N/A | 2017 | N/A
Solaben 2 & 3 | Renewable (Solar) | 70%(1) | Spain | Euro | 2x50 MW | A/Baa1/A- | 2012 | 16/16
Solacor 1 & 2 | Renewable (Solar) | 87%(2) | Spain | Euro | 2x50 MW | A/Baa1/A- | 2012 | 16/16
PS10 & PS20 | Renewable (Solar) | 100% | Spain | Euro | 31 MW | A/Baa1/A- | 2007&2009 | 11/13
Helioenergy 1 & 2 | Renewable (Solar) | 100% | Spain | Euro | 2x50 MW | A/Baa1/A- | 2011 | 15/15
Helios 1 & 2 | Renewable (Solar) | 100% | Spain | Euro | 2x50 MW | A/Baa1/A- | 2012 | 16/16
Solnova 1, 3 & 4 | Renewable (Solar) | 100% | Spain | Euro | 3x50 MW | A/Baa1/A- | 2010 | 14/14/14
Solaben 1 & 6 | Renewable (Solar) | 100% | Spain | Euro | 2x50 MW | A/Baa1/A- | 2013 | 17/17
Seville PV | Renewable (Solar) | 80%(6) | Spain | Euro | 1 MW | A/Baa1/A- | 2006 | 15
Kaxu | Renewable (Solar) | 51%(3) | South Africa | Rand | 100 MW | BB-/Ba2/BB-(11) | 2015 | 14
Elkhorn Valley | Renewable (Wind) | 49% | Oregon (USA) | USD | 101 MW | BBB/A3/-- | 2007 | 7
Prairie Star | Renewable (Wind) | 49% | Minnesota (USA) | USD | 101 MW | --/A3/A- | 2007 | 7
Twin Groves II | Renewable (Wind) | 49% | Illinois (USA) | USD | 198 MW | BBB-/Baa2/BBB | 2008 | 5
Lone Star II | Renewable (Wind) | 49% | Texas (USA) | USD | 196 MW | Not rated | 2008 | 2
Palmatir | Renewable (Wind) | 100% | Uruguay | USD | 50 MW | BBB/Baa2/BBB-(12) | 2014 | 13
Cadonal | Renewable (Wind) | 100% | Uruguay | USD | 50 MW | BBB/Baa2/BBB-(12) | 2014 | 13
Melowind | Renewable (Wind) | 100% | Uruguay | USD | 50 MW | BBB/Baa2/BBB- | 2015 | 15
Coso | Renewable (Geothermal) | 100% | California (USA) | USD | 135 MW | Investment Grade(14) | 1987-1989 | 19
Mini-Hydro | Renewable (Hydraulic) | 100% | Peru | USD | 4 MW | BBB+/A3/BBB+ | 2012 | 12
ACT | Efficient natural gas & heat | 100% | Mexico | USD | 300 MW | BBB/ Ba3/BB- | 2013 | 12
Monterrey | Efficient natural gas &heat | 30% | Mexico | USD | 142 MW | Not rated | 2018 | 17
Calgary | Efficient natural gas &heat | 100% | Canada | CAD | 55MWt | ~41% A+ or higher(15) | 2010 | 20
ATN (13) | Transmission line | 100% | Peru | USD | 379 miles | BBB+/A3/BBB+ | 2011 | 20
ATS | Transmission line | 100% | Peru | USD | 569 miles | BBB+/A3/BBB+ | 2014 | 23
ATN 2 | Transmission line | 100% | Peru | USD | 81 miles | Not rated | 2015 | 12
Quadra 1 & 2 | Transmission line | 100% | Chile | USD | 49 miles/32 miles | Not rated | 2014 | 14/14
Palmucho | Transmission line | 100% | Chile | USD | 6 miles | BBB+/WR/A- | 2007 | 16
Chile TL3 | Transmission line | 100% | Chile | USD | 50 miles | A/A1/A- | 1993 | Regulated
Skikda | Water | 34.2%(4) | Algeria | USD | 3.5 M ft3/day | Not rated | 2009 | 13
Honaine | Water | 25.5%(5) | Algeria | USD | 7 M ft3/day | Not rated | 2012 | 16
Tenes | Water | 51%(7) | Algeria | USD | 7 M ft3/day | Not rated | 2015 | 19
(1) | Itochu Corporation, a Japanese trading company, holds 30% of the shares in each of Solaben 2 and Solaben 3.
(2) | JGC, a Japanese engineering company, holds 13% of the shares in each of Solacor 1 and Solacor 2.
(3) | Kaxu is owned by the Company (51%), Industrial Development Corporation of South Africa (29%) and Kaxu Community Trust (20%).
(4) | Algerian Energy Company, SPA owns 49% of Skikda and Sacyr Agua, S.L. owns the remaining 16.83%.
(5) | Algerian Energy Company, SPA owns 49% of Honaine and Sacyr Agua, S.L. owns the remaining 25.5%.
(6) | Instituto para la Diversificación y Ahorro de la Energía (“Idae”), a Spanish state-owned company, holds 20% of the shares in Seville PV.
(7) | Algerian Energy Company, SPA owns 49% of Tenes.
(8) | 65% of the shares in Chile PV 1 and Chile PV 2 is indirectly held by financial partners through the renewable energy platform of the Company in Chile.
(9) | Certain contracts denominated in U.S. dollars are payable in local currency.
(10) | Reflects the counterparty’s credit ratings issued by Standard & Poor’s Ratings Services, or S&P, Moody’s Investors Service Inc., or Moody’s, and Fitch Ratings Ltd, or Fitch.
(11) | Refers to the credit rating of the Republic of South Africa. The offtaker is Eskom, which is a state-owned utility company in South Africa.
(12) | Refers to the credit rating of Uruguay, as UTE (Administración Nacional de Usinas y Transmisoras Eléctricas) is unrated.
(13) | Including ATN Expansion 1 & 2.
(14) | Refers to the credit rating of Southern California Public Power Authority, with AA- Rating from Fitch, and two Community Choice Aggregators: Silicon Valley Clean Energy and Monterrey Bar Community Power, both with A Rating from S&P.
(15) | Refers to the credit rating of diversified mix of 22 high credit quality clients (~41%+ rating or higher, the rest is unrated).
(16) | As of June 30, 2021.
(*) | Commercial Operation Date
The Kaxu project financing arrangement contains cross-default provisions related to Abengoa such that debt defaults by Abengoa, subject to certain threshold amounts and/or a restructuring process, could trigger a default under the Kaxu project financing arrangement. The insolvency filing by the individual company Abengoa S.A. on February 22, 2021 represents a theoretical event of default under the Kaxu project finance agreement. Although the Company does not expect the acceleration of debt to be declared by the credit entities, Kaxu does not have what International Accounting Standards define as an unconditional right to defer the settlement of the debt for at least twelve months, as the cross-default provisions make that right conditional. Therefore, Kaxu total debt (Note 15) has been presented as current in the Consolidated Condensed Interim Financial Statements of the Company as of June 30, 2021 for an amount of $359 million, in accordance with International Accounting Standards 1 (“IAS 1”), “Presentation of Financial Statements”. The Company is currently negotiating a waiver from the creditors and/or contractual modifications to permanently remove the cross-default provision.

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