Pentagreen Capital, a sustainable infrastructure debt financing partnership established by shareholders HSBC and Temasek, and Citicore Solar Energy Corporation (CSEC), the solar development vehicle of Citicore Renewables, a Philippines-based integrated renewable energy platform signed a landmark financing to accelerate the development of new solar power projects.
In its maiden project financing role, Pentagreen, serving as the exclusive Mandated Lead Arranger, has structured a Mezzanine Construction Green Loan Facility worth US$100 million. The initial commitment from Pentagreen stands at US$30 million and will support a portfolio of six solar power projects boasting a collective capacity of 490 megawatts (“MWs”) situated across Luzon Island in the Philippines.
Pentagreen’s US$30 million pledge represents the first international institutional investment in this endeavour and is strategically designed to facilitate additional debt funding for the construction of a series of ready-to-build projects. Importantly, this commitment comes with a greenshoe option that could potentially increase the total investment to US$100 million. This augmented funding would not only aid the development of more greenfield solar projects but also expand the portfolio to exceed 1 gigawatt (“GW”) in capacity.
The initial tranche of funding will support the construction of four greenfield projects and two recently completed ones. These projects are anticipated to contribute approximately 691 gigawatt hours (“GWHs”) of renewable electricity into the Luzon grid annually while making a significant impact on reducing Greenhouse Gas (“GHG”) emissions, estimated at 430,000 tonnes of CO2 annually, as per the methodology established by the International Financial Institutions Technical Working Group on Greenhouse Gas Accounting.
Developed by CSEC, which has plans to roll out 1GW of solar capacity per year over the next five years, the projects will sell green electricity to a combination of long-term and spot market customers, supporting the Philippines’ Department of Energy’s goal of generating 35% of the country’s energy needs from renewable sources by 2030 and 50% by 2040.
“We are delighted to partner with Citicore Renewables to support its ambition of becoming a leading green electricity provider in the Philippines and are honoured to welcome them as the first addition to our own portfolio,” said Marat Zapparov, CEO of Pentagreen Capital. “As a dedicated financing vehicle for sustainable infrastructure, Pentagreen identifies opportunities where our capital and structuring capabilities can serve to unlock the barriers to infrastructure development. We believe vehicles like ours will play a crucial role in financing Asia’s progress towards net zero.”
“Pentagreen’s partnership with Citicore Renewables is a vote of confidence in our ability to scale up, enabling us to achieve our planned 1GW project roll out this year, in line with our 5GW in 5 years roadmap. We appreciate Pentagreen’s support for our solar projects as it unlocks the development of our renewable energy capacity pipeline in an accelerated manner,” said Oliver Tan, Chief Executive Officer of Citicore Renewable Energy Corporation.
“This first deal is testament to the innovative and agile approach that Pentagreen can adopt to bring capital to areas where it’s most needed in the fight against climate change. Providing finance and building global partnerships to help channel investment towards sustainable projects means HSBC can make an effective impact in addressing Asia’s infrastructure investment gaps,” said Kelvin Tan, ASEAN Head of Sustainable Finance of HSBC and Board Director of Pentagreen Capital.
“The accelerated development of renewable energy is vital for Asia to meet its net-zero ambitions and decarbonise in a rapid and inclusive manner. Pentagreen is demonstrating that a specialised lender can effectively remove the barriers to bankability and unlock the implementation of projects in the region. Blended finance solutions will be critical to enable such transactions to be done at scale, and Temasek is delighted to continue its partnership with HSBC to support Pentagreen on this journey,” said Connie Chan, Head, Financial Services at Temasek and Board Director of Pentagreen Capital.