| Nature of the business |
Note 1. - Nature of the business
Atlantica
Sustainable Infrastructure plc (“Atlantica” or the “Company”) is a sustainable infrastructure company with a majority of its business in renewable energy assets. Atlantica currently owns, manages and invests in renewable energy, storage,
efficient natural gas and heat, electric transmission lines and water assets focused on North America (the United States, Canada and Mexico), South America (Peru, Chile, Colombia and Uruguay) and EMEA (Spain, Italy, Algeria and South Africa).
Atlantica’s shares
trade on the NASDAQ Global Select Market under the symbol “AY”.
On January 17, 2022, the Company closed the acquisition of Chile TL4, a 63-mile transmission line and 2 substations in Chile for a total
equity investment of $39 million. The Company expects to make an expansion of the line no later than in 2023, which would
represent an additional investment of approximately $8 million. The asset has fully contracted revenues in US dollars, with
inflation escalation and 50-year contract life. The off-takers are several mini-hydro plants that receive contracted or
regulated payments.
During the year 2021, the Company completed the following acquisitions:
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In 2021, the Company closed the acquisition in two stages of the 85% equity interest in Rioglass Solar Holding S.A.
(“Rioglass”) that it did not previously own for a total investment of $17.1 million, resulting in a 100% ownership (Note 5). Rioglass is a supplier of spare parts and services in the solar industry and the Company gained control over the
asset in January 2021.
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On April 7, 2021, the Company closed the acquisition of Coso, a 135 MW geothermal plant in the United States with 18-year average contract life PPAs in place. The total equity
investment was $130 million (Note 5). In addition, on July 15, 2021, the Company repaid $40 million to reduce project debt.
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On May 14, 2021, the Company closed the acquisition of Calgary
District Heating, a district heating asset in Canada for a total equity investment of $22.9 million (Note 5). The asset has availability-based revenue with inflation indexation and 20 years of weighted average contract life at the time of the acquisition.
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On June 16, 2021, the Company acquired a 49% interest in Vento II, a 596
MW wind portfolio in the United States, 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 a five-year average remaining contract life at the time of the investment.
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On August 6, 2021, the Company closed the acquisition of
Italy PV 1 and Italy PV 2, two solar PV plants in Italy with a combined capacity of 3.7 MW for a total equity investment of $9
million (Note 5). On December 14, 2021, the Company closed the acquisition of Italy PV 3, a 2.5 MW solar PV
portfolio in Italy for a total equity investment of $4 million (Note 5). These assets have regulated revenues under a feed
in tariff until 2030, 2031 and 2032, respectively.
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On November 25, 2021, the Company closed the acquisition of La
Sierpe, a 20 MW solar PV plant in Colombia for a total equity investment of $23.5 million (Note 5). The asset was acquired under a Right of First Offer (“ROFO”) agreement with Liberty GES.
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The following table provides an overview of the main contracted concessional
assets the Company owned or had an interest in as of March 31, 2022:
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Assets
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Type
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Ownership
|
Location
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Currency(9)
|
Capacity
(Gross)
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Counterparty
Credit Ratings(10)
|
COD*
|
Contract
Years
Remaining(16)
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Solana
|
Renewable (Solar)
|
100%
|
Arizona (USA)
|
USD
|
280 MW
|
BBB+/A3/BBB+
|
2013
|
22
|
|
Mojave
|
Renewable (Solar)
|
100%
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California (USA)
|
USD
|
280 MW
|
BB-/ -- /BB
|
2014
|
18
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Coso
|
Renewable (Geothermal) |
100% |
California (USA) |
USD |
135 MW |
Investment Grade(11) |
1987-1989 |
17 |
Elkhorn Valley
|
Renewable (Wind) |
49% |
Oregon (USA) |
USD |
101 MW |
BBB/A3/-- |
2007 |
6 |
Prairie Star
|
Renewable (Wind) |
49% |
Minnesota (USA) |
USD |
101 MW |
--/A3/A- |
2007 |
6 |
Twin Groves II
|
Renewable (Wind) |
49% |
Illinois (USA) |
USD |
198 MW |
BBB-/Baa2/-- |
2008 |
4 |
Lone Star II
|
Renewable (Wind) |
49% |
Texas (USA) |
USD |
196 MW |
Not rated |
2008 |
1 |
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Chile PV 1
|
Renewable (Solar)
|
35%(1)
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Chile
|
USD
|
55 MW
|
N/A
|
2016
|
N/A
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Chile PV 2
|
Renewable (Solar)
|
35%(1)
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Chile
|
USD
|
40 MW
|
Not rated
|
2017
|
9
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La Sierpe
|
Renewable (Solar) |
100% |
Colombia |
COP |
20 MW |
Not rated |
2021 |
14 |
Palmatir
|
Renewable (Wind) |
100% |
Uruguay |
USD |
50 MW |
BBB/Baa2/BBB-(12) |
2014 |
12 |
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 |
14 |
Mini-Hydro
|
Renewable (Hydraulic) |
100% |
Peru |
USD |
4 MW |
BBB+/Baa1/BBB |
2012 |
11 |
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Solaben 2 & 3
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Renewable (Solar)
|
70%(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
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16/16
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Solacor 1 & 2
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Renewable (Solar)
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87%(3)
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Spain
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Euro
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2x50 MW
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A/Baa1/A-
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2012
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15/15
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PS10 & PS20
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Renewable (Solar)
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100%
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Spain
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Euro
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31 MW
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A/Baa1/A-
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2007&2009
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10/12
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Helioenergy 1 & 2
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Renewable (Solar)
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100%
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Spain
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Euro
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2x50 MW
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A/Baa1/A-
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2011
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15/15
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Helios 1 & 2
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Renewable (Solar)
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100%
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Spain
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Euro
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2x50 MW
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A/Baa1/A-
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2012
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15/16
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Solnova 1, 3 & 4
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Renewable (Solar)
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100%
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Spain
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Euro
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3x50 MW
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A/Baa1/A-
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2010
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13/13/14
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Solaben 1 & 6
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Renewable (Solar)
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100%
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Spain
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Euro
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2x50 MW
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A/Baa1/A-
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2013
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17/17
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Seville PV
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Renewable (Solar)
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80%(4)
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Spain
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Euro
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1 MW
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A/Baa1/A-
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2006
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14
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Italy PV 1
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Renewable (Solar) |
100% |
Italy |
Euro |
1.6 MW |
BBB/Baa3/BBB |
2010 |
9 |
Italy PV 2
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Renewable (Solar) |
100% |
Italy |
Euro |
2.1 MW |
BBB/Baa3/BBB |
2011 |
9 |
Italy PV 3
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Renewable (Solar) |
100% |
Italy |
Euro |
2.5 MW |
BBB/Baa3/BBB |
2012 |
10 |
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Kaxu
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Renewable (Solar)
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51%(5)
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South Africa
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Rand
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100 MW
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BB-/Ba2/BB-(13)
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2015
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13
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Calgary
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Efficient natural gas &heat
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100%
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Canada
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CAD
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55 MWt
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~41% A+ or higher(14)
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2010
|
19
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ACT
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Efficient natural gas & heat
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100%
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Mexico
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USD
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300 MW
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BBB/ Ba3/BB-
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2013
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11
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| Monterrey |
Efficient natural gas &heat |
30% |
Mexico |
USD |
142 MW |
Not rated
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2018 |
17 |
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ATN (15)
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Transmission line
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100%
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Peru
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USD
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379 miles
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BBB/Baa1/BBB
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2011
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19
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ATS
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Transmission line
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100%
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Peru
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USD
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569 miles
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BBB/Baa1/BBB
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2014
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22
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ATN 2
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Transmission line
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100%
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Peru
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USD
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81 miles
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Not rated
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2015
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11
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Quadra 1 & 2
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Transmission line
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100%
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Chile
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USD
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49 miles/32 miles
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Not rated
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2014
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13/13
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Palmucho
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Transmission line
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100%
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Chile
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USD
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6 miles
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BBB/ -- /A-
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2007
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16
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Chile TL3
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Transmission line
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100%
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Chile
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USD
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50 miles
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A/A1/A-
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1993
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Regulated
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| Chile TL4 |
Transmission line
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100%
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Chile
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USD
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63 miles
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Not rated
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2016
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50
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Skikda
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Water
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34.2%(6)
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Algeria
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USD
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3.5 M ft3/day
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Not rated
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2009
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12
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Honaine
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Water
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25.5%(7)
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Algeria
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USD
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7 M ft3/day
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Not rated
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2012
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16
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Tenes
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Water
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51%(8)
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Algeria
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USD
|
7 M ft3/day
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Not rated
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2015
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18
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| (1) |
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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| (2) |
Itochu Corporation holds 30% of the shares in each of Solaben 2 and Solaben 3.
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| (3) |
JGC holds 13% of the shares in each of Solacor 1 and Solacor 2.
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| (4) |
Instituto para la
Diversificación y Ahorro de la Energía (“Idae”) holds 20%of the shares in Seville PV.
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| (5) |
Kaxu is owned by the Company (51%), Industrial Development
Corporation of South Africa (29%) and Kaxu Community Trust (20%).
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| (6) |
Algerian Energy Company, SPA owns 49% of Skikda and Sacyr Agua,
S.L. owns the remaining 16.8%.
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| (7) |
Algerian Energy Company, SPA owns 49% of Honaine and Sacyr Agua, S.L. owns the remaining 25.5%.
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| (8) |
Algerian Energy Company,
SPA owns 49% of Tenes.
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| (9) |
Certain contracts denominated in U.S. dollars
are payable in local currency.
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| (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.
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| (11) |
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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| (12) |
Refers to the credit rating
of Uruguay, as UTE (Administración Nacional de Usinas y Transmisoras Eléctricas) is unrated.
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| (13) |
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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| (14) |
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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| (15) |
Including ATN Expansion 1 & 2.
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| (16) |
As of December 31, 2021.
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| (*) |
Commercial Operation Date.
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The Kaxu project financing arrangement contained
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 represented 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 was an Abengoa subsidiary. On February 1, 2022, the Company transferred the employees performing the operation and maintenance services to an
Atlantica subsidiary. The lenders confirmed that all the conditions precedent to the waiver were fulfilled as of March 31, 2022 and the waiver became effective as of that date. As a result, as of March 31, 2022, the Company has again an
unconditional right to defer the settlement of the debt for at least twelve months, and therefore the debt previously presented as current (as of December 31, 2021) has been reclassified as non-current in accordance with the financing
agreements in these Consolidated Condensed Interim Financial Statements (Note 15).
As expected, the Administration in Spain has recently approved measures to adjust the regulated revenue component for renewable
energy plants, following the increase since mid 2021 in the revenue these plants receive from sales of electricity in the market. On March 30, 2022, the Royal Decree Law 6/2022 was published, adopting urgent measures in response to the
economic and social consequences of the war in Ukraine. This Royal Decree Law contains a bundle of measures in diverse fields, including those targeted at containing the sharp rise in the prices of gas and electricity. It includes temporary
changes to the detailed regulated components of revenue received by the solar assets of the Company in Spain, which are applicable from January 1, 2022, as follows:
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The statutory half-period of three years from 2020 to 2022 has been split into two statutory half-periods (1) from
January 1, 2020 until December 31, 2021 and (2) calendar year 2022. As a result, the fixed monthly payment based on installed capacity
(Remuneration on Investment or Rinv) for calendar year 2022 will be revised.
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The market price assumed by the regulation for calendar year 2022 was changed from €48.82 per MWh to an expected price of €110.4
per MWh (after applying the correction factor for the technology). There is an expectation that the variable payment based on net electricity produced
(Remuneration on operation or Ro), which is expressed in €/MW, will also be adjusted, although details have not been published as of the date of these Consolidated Condensed Interim Financial Statements.
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For the three-year half-period starting on January 1, 2023 and ending on December 31, 2025, the adjustment mechanism
for electricity market price deviations in the preceding statutory half-period will no longer apply.
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The Company expects the detailed components of pricing to be published within a two-month period following the publication of the
Royal Decree Law. With the information currently available, it is not possible to measure the potential economic impact of these temporary measures.
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