Moody’s affirms Baa1 rating to Noor Abu Dhabi solar PV project bonds

Moody’s Investors Service affirmed a Baa1 rating to the nearly $728 million fixed rate, senior secured, amortising bonds issued by the operator of the 881-megawatt Noor Abu Dhabi solar photovoltaic project, citing the importance of the project to government policy.

The rating also reflects the proven solar PV technology in use and economies of scale with no construction risk, Moody’s said. A Baa1 rating is the eighth-highest credit rating issued by Moody’s and indicates only a moderate credit risk.

“The Noor Abu Dhabi refinancing marks an important milestone in the financing of renewable energy in the Emirates and broader region,” Christopher Bredholt, vice president – senior credit officer at Moody’s and lead analyst for the issuer, said.

“The strong solar resource, favourable contractual framework and economies of scale support solar PV’s role in the government’s strategic plans to increase energy security and reduce gas consumption.”

Noor Abu Dhabi solar photovoltaic project was commissioned in November 2018 and began commercial operation in April 2019. It is owned and operated by a special-purpose vehicle, Sweihan PV Power Company, the issuer. The project is in a strategic location on the high-voltage transmission grid near the town of Sweihan in Abu Dhabi.

Noor Abu Dhabi solar PV project sells its generated electricity to Emirates Water and Electricity Company under a long-term take-or-pay power purchase agreement (PPA). The proceeds of the bonds, which are due in 2049, will be used to refinance existing debt, pay transaction expenses and fund the debt service reserve account, and to be distributed to shareholders.

Moody’s also maintained a stable outlook on the project bonds, reflecting the “relatively straightforward nature of the technology and price certainty provided by the PPA”.

The issuer is positioned at the higher end of comparable solar PV project finance peers and an upgrade is unlikely over the next 12 to 18 months, the ratings agency said.

The company (issuer) is part of Abu Dhabi Energy Company, also known as Taqa, which holds a 60 per cent interest in it. Marubeni Corporation and Jinko Solar hold 20 per cent interests each in the company.

The UAE
The UAE, an Opec oil producer, has been looking to diversify its energy mix away from hydrocarbons. The country generates much of its power from natural gas and plans to add 50 per cent renewables capacity by 2050.