Renta 4 | Grenergy (GRE) has announced the signing of a financial tolling contract for its Escuderos hybrid project (200 MW of solar power and 680 MWh of storage) with the Spanish subsidiary of an international utility with an investment grade rating.
The agreement covers 80% of the total capacity of the battery system (assuming 1.5 cycles per day) and sets the price differential on the day-ahead market. The contract has a duration of 12 years, commencing in July 2028. In addition to the revenue from the tolling, the project will generate revenue from participation in ancillary services and other available markets. Potential capacity payments in Spain would represent an additional source of revenue.
The Escuderos solar plant (200 MW) is currently in operation under a 12-year PPA signed with Galp in 2020. Construction of the battery energy storage system (BESS) will begin in the second half of this year, with connection scheduled for 2027. Grenergy will be responsible for the operation and maintenance of the batteries, which have an estimated lifespan of 20 years.
Assessment: Positive news. The agreement validates Grenergy’s strategy of hybridising solar assets in Spain, replicating the model that has proven successful in Chile. The signing of a 12-year tolling agreement with a counterparty of high credit quality significantly reduces project risk, ensures a stable source of revenue and mitigates exposure to spot market volatility. This announcement follows the financial tolling agreement for the stand-alone battery project in Asturias (Oviedo, 150MW/600MWh) announced in February this year.
We reiterate our Hold recommendation, with a Target Price of €102 per share.
