| 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 and 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 43.9% 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:
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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.
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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.
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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.
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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 subject to conditions precedent and regulatory approvals and is expected to occur in the fourth quarter of 2021. 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 Solar Holding S.A. (“Rioglass”) a supplier of spare parts and services to 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, was 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 an 18-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, a district heating asset of approximately 55 MWt 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 in line with 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 the 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.
On August 6, 2021, the Company closed the acquisition of Agrisun and Re Sole, two solar PV plants in Italy with a combined capacity of 3.7
MW for a total equity investment of $9 million (Note 5). Agrisun and Re Sole have regulated revenues under a feed in tariff until
2030 and 2031, respectively.
The following table provides an overview of the main contracted concessional
assets the Company owned or had an interest in as of September 30, 2021:
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Assets
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Type
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Ownership
|
Location
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Currency(9)
|
Capacity
(Gross)
|
Counterparty
Credit Ratings(10)
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COD*
|
Contract
Years
Remaining(16)
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Solana
|
Renewable (Solar)
|
100%
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Arizona (USA)
|
USD
|
280 MW
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A-/A2/BBB+
|
2013
|
22
|
|
Mojave
|
Renewable (Solar)
|
100%
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California (USA)
|
USD
|
280 MW
|
BB-/WR/BB
|
2014
|
18
|
|
Chile PV 1
|
Renewable (Solar)
|
35%(8)
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Chile
|
USD
|
55 MW
|
N/A
|
2016
|
N/A
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Chile PV 2
|
Renewable (Solar)
|
35%(8)
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Chile
|
USD
|
40 MW
|
N/A
|
2017
|
N/A
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Solaben 2 & 3
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Renewable (Solar)
|
70%(1)
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Spain
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Euro
|
2x50 MW
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A/Baa1/A-
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2012
|
16/16
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Solacor 1 & 2
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Renewable (Solar)
|
87%(2)
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Spain
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Euro
|
2x50 MW
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A/Baa1/A-
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2012
|
16/16
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PS10 & PS20
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Renewable (Solar)
|
100%
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Spain
|
Euro
|
31 MW
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A/Baa1/A-
|
2007&2009
|
11/13
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Helioenergy 1 & 2
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Renewable (Solar)
|
100%
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Spain
|
Euro
|
2x50 MW
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A/Baa1/A-
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2011
|
15/15
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Helios 1 & 2
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Renewable (Solar)
|
100%
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Spain
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Euro
|
2x50 MW
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A/Baa1/A-
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2012
|
16/16
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Solnova 1, 3 & 4
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Renewable (Solar)
|
100%
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Spain
|
Euro
|
3x50 MW
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A/Baa1/A-
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2010
|
14/14/14
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Solaben 1 & 6
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Renewable (Solar)
|
100%
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Spain
|
Euro
|
2x50 MW
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A/Baa1/A-
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2013
|
17/17
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Seville PV
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Renewable (Solar)
|
80%(6)
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Spain
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Euro
|
1 MW
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A/Baa1/A-
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2006
|
15
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Re Sole
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Renewable (Solar) |
100% |
Italy |
Euro |
2.1 MW |
BBB/Baa3/BBB- |
2011 |
10
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Agrisun
|
Renewable (Solar) |
100% |
Italy |
Euro |
1.6 MW |
BBB/Baa3/BBB- |
2010 |
9
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Kaxu
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Renewable (Solar)
|
51%(3)
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South Africa
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Rand
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100 MW
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BB-/Ba2/BB-(11)
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2015
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14
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Elkhorn Valley
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Renewable (Wind) |
49% |
Oregon (USA) |
USD |
101 MW |
BBB/A3/-- |
2007 |
7 |
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Prairie Star
|
Renewable (Wind) |
49% |
Minnesota (USA) |
USD |
101 MW |
--/A3/A- |
2007 |
7 |
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Twin Groves II
|
Renewable (Wind) |
49% |
Illinois (USA) |
USD |
198 MW |
BBB-/Baa2/BBB |
2008 |
5 |
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Lone Star II
|
Renewable (Wind) |
49% |
Texas (USA) |
USD |
196 MW |
Not rated |
2008 |
2 |
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Palmatir
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Renewable (Wind)
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100%
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Uruguay
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USD
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50 MW
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BBB/Baa2/BBB-(12)
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2014
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13
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Cadonal
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Renewable (Wind)
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100%
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Uruguay
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USD
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50 MW
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BBB/Baa2/BBB-(12)
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2014
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13
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Melowind
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Renewable (Wind)
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100%
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Uruguay
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USD
|
50 MW
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BBB/Baa2/BBB-
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2015
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15
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| Coso |
Renewable (Geothermal) |
100% |
California (USA) |
USD |
135 MW |
Investment Grade(14)
|
1987-1989 |
19 |
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Mini-Hydro
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Renewable (Hydraulic)
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100%
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Peru
|
USD
|
4 MW
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BBB+/A3/BBB+
|
2012
|
12
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ACT
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Efficient natural gas & heat
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100%
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Mexico
|
USD
|
300 MW
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BBB/ Ba3/BB-
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2013
|
12
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Monterrey
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Efficient natural gas &heat
|
30%
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Mexico
|
USD
|
142 MW
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Not rated
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2018
|
17
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| Calgary |
Efficient natural gas &heat |
100% |
Canada |
CAD |
55 MWt |
~41% A+ or higher(15) |
2010 |
20 |
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ATN (13)
|
Transmission line
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100%
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Peru
|
USD
|
379 miles
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BBB+/Baa1/BBB
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2011
|
20
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ATS
|
Transmission line
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100%
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Peru
|
USD
|
569 miles
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BBB+/Baa1/BBB
|
2014
|
23
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ATN 2
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Transmission line
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100%
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Peru
|
USD
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81 miles
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Not rated
|
2015
|
12
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Quadra 1 & 2
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Transmission line
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100%
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Chile
|
USD
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49 miles/32 miles
|
Not rated
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2014
|
14/14
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Palmucho
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Transmission line
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100%
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Chile
|
USD
|
6 miles
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BBB+/WR/A-
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2007
|
16
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Chile TL3
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Transmission line
|
100%
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Chile
|
USD
|
50 miles
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A/A1/A-
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1993
|
Regulated
|
|
Skikda
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Water
|
34.2%(4)
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Algeria
|
USD
|
3.5 M ft3/day
|
Not rated
|
2009
|
13
|
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Honaine
|
Water
|
25.5%(5)
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Algeria
|
USD
|
7 M ft3/day
|
Not rated
|
2012
|
16
|
|
Tenes
|
Water
|
51%(7)
|
Algeria
|
USD
|
7 M ft3/day
|
Not rated
|
2015
|
19
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(1)
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Itochu Corporation, a Japanese trading company, holds 30% of the shares in each of Solaben 2 and Solaben 3.
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(2)
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JGC, a Japanese engineering company, holds 13% of the
shares in each of Solacor 1 and Solacor 2.
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(3)
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Kaxu is owned by the Company (51%), Industrial Development Corporation of South Africa (29%) and Kaxu Community Trust (20%).
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(4)
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Algerian Energy Company, SPA owns 49% of Skikda and Sacyr Agua, S.L. owns the remaining 16.83%.
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(5)
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Algerian Energy Company, SPA owns 49% of Honaine and Sacyr Agua, S.L. owns the remaining 25.5%.
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(6)
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Instituto para la Diversificación y Ahorro de la Energía (“Idae”), a Spanish state-owned company, holds 20% of the shares in Seville
PV.
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(7)
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Algerian Energy Company, SPA owns 49% of Tenes.
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(8)
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65% of the shares in Chile PV
1 and Chile PV 2 are indirectly held by financial partners through the renewable energy platform of the Company in Chile.
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(9)
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Certain contracts denominated in U.S. dollars are payable in local currency.
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(10)
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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.
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(11)
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Refers to the credit rating of the Republic of South Africa. The off-taker is Eskom, which is a
state-owned utility company in South Africa.
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(12)
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Refers to the credit rating
of Uruguay, as UTE (Administración Nacional de Usinas y Transmisoras Eléctricas) is unrated.
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(13)
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Including ATN Expansion 1 & 2.
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(14)
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Refers to the credit
rating of two Community Choice Aggregators: Silicon Valley Clean Energy and Monterrey Bar Community Power, both with A Rating from S&P and Southern California Public Power Authority. The third off-taker is not rated.
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(15)
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Refers to the credit rating of a diversified mix of 22 high credit quality clients (~41%A+ rating or higher, the rest is
unrated).
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(16)
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As of September 30, 2021.
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(*)
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Commercial Operation Date
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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. in
February 2021 represents a theoretical event of default under the Kaxu project finance agreement. In September 2021, the Company obtained a waiver for such theoretical event of default which was conditional upon the replacement of the operation
and maintenance supplier of the plant, which is currently an Abengoa subsidiary, before October 31, 2021. On November 4, 2021, the Company obtained an extension of the term for such replacement until January 31, 2022. Although the Company does
not expect the acceleration of debt to be declared by the credit entities, as of September 30, 2021 Kaxu did 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 September 30, 2021
for an amount of $349 million, in accordance with International Accounting Standards 1 (“IAS 1”), “Presentation of Financial
Statements”.
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