MPC Capital, a finance energy company, expects a series of projects within two years in several regional markets with the inclusion of Jamaica. Overseeing a US $23 Million rights issue by its regional the operation, MPC Caribbean Clean Energy Limited, the German company, has signed two agreements with the local tertiary level intuitions to supply them with solar power systems.
Both managing Director, David Delaire and Martin Vogle, are hoping to avoid the disappointing outcome of MPC Caribbean’s first market initial attempt, which demanded US$11 million of a targeted US$50 million from investors in Jamaica and Trinidad.
“We’re here … because we want to make sure that we leave no stone unturned in this round. We may have been conservative at the time of the IPO so this time we decided to go full force.” Delaire noted.
However, the company is also in the process of searching for a business as memorandums of understanding were signed separately by the University of the Commonwealth Caribbean for a 2MW rooftop solar system for its New Kingston campus as well as the Mico Foundation for a similar rooftop system to be installed at The Mico University College. The authorization for implementing this for Mico is expected in the second quarter of 2020, while UCC’s will come on-stream in the fourth quarter of 2020.
Declaire states that the project should cost US$2 million each. However, he described them as relatively small tasks among the different number of projects MPC has in place to be completed by the end of 2021.
The company is funding two solar power system projects in El Salvador, on which construction should begin in January. There will also be another solar power system project in the Dominican Republic, a wind farm project in Costa Rica and a solar power system project implemented in Barbados.
One of MPC’s greenfield investments that took place this year is a 35 percent stake in the Eight Rivers solar farm at Paradise Park in the parish of Westmoreland. However, Delaire made mention of the fact that a ‘Paradise Park 2’ is under active consideration, but that a lot depends on the direction taken by Jamaica’s authorities. Essentially, setting the timetable for when to invite investors to build large renewable systems for the national grid.
The managing director has made mention of the fact that MPC is pursuing a risk mitigation strategy that will result in the company financing a mix of renewable technologies across different markets. Its approach also includes creating a portfolio of greenfield and brownfield projects. “The approach calls for two-thirds of the assets as greenfield and the rest as brownfield, that is to say, operating proven assets that are generating revenue,” said Delaire. “Our mandate doesn’t allow us to keep the proceeds from the assets in the fund. We have to distribute it totally after expenses and taxes,” he further added.
“We now have more investors who are more convinced that the case is proven, so to speak. We’ve paid dividends and in doing so we paid more than we promised. We said six percent, and we did almost nine (percent),” he said.
“It is very simple. We sign contracts for 20 years that say whatever by way of power we produce the energy company will pay. After the portfolio is fully operational, say by 2022, the cost is pretty fixed, and the revenue is guaranteed. Therefore, it is highly sustainable,” he said.
“Being a German company, you will understand that we are very conservative with our estimates. We apply a 30 percent to our projections; so, for example, if we know that we can deliver 15 percent on a project then what we say is 10 or 11 percent – and the rest is the upside. Plus, we factor for what we call the unknowns,” he also added.