A project to be proud of

Monegros Spain 06

Copenhagen Infrastructure Partners used its industry know-how and flexible capital to secure an attractive onshore wind investment opportunity in Spain. In the process, it established a strong partnership with local developer Forestalia and generated follow-on business.

487 MW
total installed capacity of 12 onshore wind farms in operation
1,400 GWh
Expected annual power generation of approximately

Only a few years ago, Spain was a difficult destination for renewable energy investors. There were retrospective cuts to the feed-in tariffs which had previously been granted to renewable energy assets.

But the team at Copenhagen Infrastructure Partners (CIP) was quick to recognise a shift in the underlying dynamics: with significant reductions in the cost of renewables, the development of large-scale projects in Spain was starting to become a commercially viable proposition.

The right opportunity came in early 2019. The local developer Forestalia was looking for a partner to fund the construction of Monegros, a 375 MW portfolio of onshore wind projects at an advanced stage of development. It was a good match of strengths, including CIP’s engineering, procurement and other optimisa- tions. And having done its homework, CIP was one of the few large-scale investors ready to move with a bilateral negotiation.

We realised that renewables in Spain were already competitive compared to power generated from fossil fuels. Also, there was a strong demand from consumers to secure substantial volumes of green power. This gave us the confidence to proceed with the invest- ment, not relying on state support and contract- ing the power output during the construction phase
Significant value creation

“When we got involved, the project was in an advanced stage of development but not yet ready to build. This was good timing as we could improve the layout, turbine contracting, engineering and procurement. This de-risked the project ahead of the start of the construc- tion phase and improved the return,” says Florian Küster, Associate Partner at CIP.

The partnership with Forestalia went so well that in late 2019, CIP expanded the portfolio
to include three other nearby wind farms, which took the total installed capacity to almost 500MW.

Today, the Monegros portfolio consists of 12 operational onshore wind farms in Aragon, Spain, with a total installed capacity of 487 MW. The capital for constructing this portfolio was committed by Copenhagen Infrastructure III (CI-III), a €3.5 billion renewable energy infra- structure fund managed by CIP. In total, Monegros produces enough clean power each year to cover the annual electricity consumption of more than 300,000 average Spanish households.

Aragon, Spain
is the location of the project
51 %
is owned by Copenhagen Infrastructure III (CI-III)
49 %
is owned by Arjun Infrastructure Partners
Significant value creation

The portfolio benefits the local CISC office in Madrid overseeing the daily management of the projects and from a long-term power purchase agreement (PPA) with one of the Spanish market’s largest and most reputable offtakers, providing revenue security and de-risking cash flow. Once the PPA was in place, CIP optimised the capital structure, with a project finance package of some €380 million provided by a consortium of six Spanish and international banks.

Finally, CIP sold a 49% equity stake in Mone- gros to financial investor Arjun Infrastructure Partners in a transaction that captured a significant greenfield premium relative to the capital CIP has invested in the project.

Monegros is a good example of CIP utilising the flexibility of its capital, industry knowledge and relationships to stand out from the compe- tition and secure attractive assets on a bilateral basis. Thanks to our measures to de-risk the investment and enhance the returns, we have already recovered more than the invested capital and continue to own a 51% stake in the project
Future model

The significant financial value creation is a testament to the team’s skill and dedication, Küster says.

“The construction phase was impacted by COVID-19 and an unusually harsh winter in Spain. Still, we could keep things on time and on budget despite the risk of infection and shutdown. In fact, we delivered the project on time and under the budgeted cost. Now Monegros is a model for future projects – and something to be proud of,” Küster adds.

The success paved the way for another partnership with Forestalia on an 800 MW wind project in Teruel, Spain. This investment, held by the €7.25 billion Copenhagen Infrastructure IV (CI-IV) fund, is in an advanced stage of development and is expected to reach a financial close in 2023.

The strength of CIP across the board meant we were able to source and secure the right opportunity, conclude all the necessary contracts and then do a superb job in tough circumstances during construction. The repeat business we have secured is a recognition of the achievements at Monegros, and the team should certainly be proud of their work.
More information

CIP's Partners on Monegros

Mads Skovgaard Amdersen 66597
Mads Skovgaard Andersen
Partner at CIP
Florian Kuster 156
Florian Küster
Associate Partner at CIP