A solar power provider is targeting next month to raise between $75m to $100m from Bahamian investors to finance its projects on Abaco and Eleuthera.

Anthony Ferguson, CFAL’s principal, told Tribune Business that EA Energy will likely seek both equity ownership and debt capital from the local capital markets as it moves to execute on the renewable energy contract awards unveiled by the Government last summer.

Asserting that the solar generation plants to be developed by EA Energy are “fairly substantial” in terms of their capacity, he signalled that the precise timing of any offering will likely depend on receiving the go-ahead from the Securities Commission as well as when the details will be finalised. CFAL will be performing the role of financial advisor and placement agent.

“We’re probably going to come out in March with the raising of capital for Eleuthera and Abaco; solar power generation and LNG (liquefied natural gas),” Mr Ferguson told this newspaper while naming EA Energy as the company that is seeking financing.

Once the offering details are finalised, the CFAL chief said itself and EA Energy will approach the Securities Commission, the capital markets regulator, “to get everything squared away” and obtain any approvals required. “We’re looking to go to market some time in March,” Mr Ferguson reiterated. “Another group got Exuma, another group got MICAL, another group got Andros. 

Confirming that EA Energy will be seeking a combination of debt and equity capital to fulfill its financing needs, he added that while the details are still being firmed up the solar provider will likely attempt to raise “between $75m and $100m”. While not giving specifics on the technical aspects of both projects, Mr Ferguson said the solar generation plants for Abaco and Eleuthera will be “fairly substantial”.

Mr Ferguson did not identify who EA Energy or its principals are but Jobeth Coleby-Davis, minister of transport and energy, in revealing who had been selected as preferred bidders on the various New Providence and Family Island renewable energy bids named Verdant as the winner for Abaco. And the same company, along with Consus, was selected as the preferred solar generation provider for Eleuthera.

Capital markets observers have suggested that there will be significant activity in 2025 from successful solar energy bidders seeking financing to bring their projects to fruition. Larry Gibson, chief operating officer with the Coralisle Group, told Tribune Business that the need to execute on the renewable contract awards will likely make for a busier year than 2024.

“I expect that there will be greater activity this year simply based on the fact these public-private partnerships seem to be the flavour of the day,” he said. “There’s power, there’s airports. You have a lot of talk about airports but, quite frankly, we haven’t seen a lot of those airports commence. They said there were supposed to be 14 of them.”

Turning to the solar energy projects specifically, Mr Gibson said that while start-ups they are likely to be largely de-risked for investors because all providers will be signing long-term power purchase agreements (PPAs) with the Government and Bahamas Power & Light (BPL). 

These deals will govern the price at which solar energy is supplied to BPL’s grid, and set out the terms and conditions under which this is to happen. These PPAs are likely to last for 20-30 year terms, thus almost guaranteeing investors a reliable income stream and reassuring that they will both gain a return and recover their principal.

“They are more start-ups than established companies, underpinned by long-term government contracts that put them in the PPP category as opposed to high risk,” Mr Gibson said of the solar energy projects. For the most part they are guaranteed by 30-year full purchase contracts. You could really consider them quasi-governmental in a way;

“These renewable energy players, each of them, will need quite a bit of money. If you look at the size of those, they are all big amounts of money. The smaller guys are probably $25m-$30m. The ones who are going to do LNG or some sort of mixture, some of those will be up to $50m. It’s probably going to be some fixed income and preference shares as opposed to equity offerings. That’s how I see it.”

Tribune Business sources have confirmed that other solar energy award winners have also been approaching potential investors, and doing the capital market rounds, as they seek to deliver on the Government’s energy reform plan aimed at slashing electricity costs and providing more reliable, cleaner power to businesses and households.

Mr Ferguson, meanwhile, said the developer seeking to supply power to vessels docked at Nassau Cruise Port will likely seek to raise the remaining $50m debt portion of its financing in May/June this year. The $150m project obtained $60m in equity capital before year-end 2020 and, with CIBC Caribbean willing to put up $50m in bank financing, only needs a similar amount to close out its fund-raising.

“We’re probably looking to do that in May/June,” the CFAL chief said of Island Power Producers. “Probably around $50m. We settled at $60m [on the equity portion]. It’s about $150m total. We already have a commitment from the bank for up to $50m. CIBC. We’ve been doing business with them for the last 20 years.

“We prefer to give the investing public opportunities to invest as opposed to bank financing but we have a commitment from them.” While the nature of the debt securities to be issued by Island Power Producers has yet to be determined, Mr Ferguson said investor appetite presently prefers bonds over preference shares.

“We haven’t decided. It depends on the demand,” he added. “Right now, the demand from the insurance companies and pension funds is more for bonds. It gives them, I wouldn’t use the word certainty, but they have more rights than preference shares. Also, some retirees who have funds want to purchase coupons to support themselves in retirement. Those are the people we are looking to target in the first instance.”

Mr Ferguson added that Island Power Producers is continuing to make progress with its LNG plant on Arawak Cay and associated infrastructure for both receiving the fuel and supplying power to the cruise ships. “A lot of the deposits have been made with Siemens for the engines. The engineering work is complete,” he added.

“We’re still waiting on the Department of Environmental Planning and Protection (DEPP) to give final approval on certain things, but it is progressing nicely.” Island Power Producers is aiming to supply up to 60 mega watts (MW) of power to cruise ships while they are docked in port in Nassau.

Both Nassau Cruise Port and BISX-listed Arawak Port Development Company (APD) are part of the Island Power Producers consortium. Crowley, the shipping company, will be responsible for transporting the LNG fuel to Arawak Cay and its subsequent offloading.

Siemens will supply the generation equipment and manage/operate the plant, while Watts Marine, a specialist in shore power solutions, will deal with the hook-ups for all cruise vessels capable of connecting to it. An Indian company, Intertec, is providing engineering services.

The power plant facility will “abut” Arawak Port Development Company’s (APD) Nassau Container Port. The LNG will be offloaded at Nassau Container Port and transported to Island Power Producers’ generation plant via a pipeline running underneath the port’s property. Mr Ferguson, together with Mike Maura, Nassau Cruise Port’s chief executive, sits on Island Power Producers’ advisory Board.

Island Power Producers, on its website confirmed that it aims to develop a 60 MW natural gas combined cycle power plant. “Island Power Producers was established to build and operate a state-of-the-art natural gas power plant to provide shore power to cruise ships docked at the Nassau Cruise Port and to supply any excess power to Bahamas Power & Light,” it added.