Erg also announced that it has signed an agreement with the European fund focused on investments in renewable sources, for the incorporation of the joint-stock company ERG Q Solar1 which should take place by 30 September next. The NewCo, 60% owned by ERG and 40% by the Quercus Italian Solar Fund, will operate only in Italy and will be focused on the acquisition of small-scale solar plants of less than 1 MW of installed power, with a target of up to 150 MW by the end of 2021. All with the aim of consolidating the Italian photovoltaic market. Total maximum investments of 350 million euro are envisaged over the next three years, with a minimum target return in terms of equity Internal Rate of Return 'low double digit'. This is also thanks to the creation of industrial and financial synergies.
The Board of Directors of the newly established company will be made up of 7 members, 4 of whom will be appointed by Erg, including the chairman and the Chief Financial Officer, and 3 appointed by Quercus who will be responsible for designating the Chief Executive Officer. This executive body will be called upon to approve the investment proposals on the basis of previously established guidelines. Both shareholders will be able to dissolve the company in the event of failure to achieve the minimum progressive objectives of MW acquired, previously agreed between the parties. In any case, Quercus will be able to sell its stake starting from 1 April 2029, if the Genoese group has not exercised, starting from 1 January 2029 and by 31 March 2029, a call option for the purchase of the shares held in the new company by Quercus itself at a consideration calculated taking into account the net cash flows distributable to shareholders expected for subsequent years. The European fund focused on investments in renewable sources will contribute its know-how by managing the selection of potential targets, and the coordination of negotiation activities, while Erg will contribute with its industrial and financial expertise.
There are also other innovations on the wind power front, expanding its business in the UK and France. Through its subsidiary ERG Eolienne France SAS, the group led by Luca Bettonte acquired from Renvico France SAS 25% of the capital of the companies Parc Eolienne de la Voie Sacrée SAS and Parc Eolienne d'Epense SAS, owners of two wind farms total of 16,25 MW which entered into operation respectively in 2007 and 2005, of which it had already acquired 75% from Vent d'Est SAS last March (see CS dated 22/03/2018). The total value of the acquisition corresponds to an enterprise value of 12,4 million euros. This transaction, associated with the purchase of the Melier wind farm (8 MW), with the planned entry into service during the year of the farms under construction at Torfou (18 MW) and Vallée de l'Aa (13 MW), will allow ERG to increase the installed capacity in France by 55 MW, bringing it to over 300 MW by the end of the year.
In the UK, on the other hand, through its subsidiary ERG Power Generation SpA, Erg completed the acquisition of 100% of the shares of the company Creag Riabhach Wind Farm Ltd, a company incorporated under Scottish law that holds the authorizations for the construction of a wind farm in Scotland, north of Inverness in the county of Sutherland. The park will consist of 22 turbines for an authorized capacity of 79,2 MW and an estimated electricity production, when fully operational, of approximately 250 GWh per year, equal to over 3.000 equivalent hours and approximately 147 kt of CO2 emissions avoided .
The start of works for the construction of the wind farm is expected in 2020 and entry into operation, following the finalization of the connection to the national grid, by March 2022. The project will participate in the energy and services markets existing capacity in the UK. The estimated total investment for the construction of the park is approximately 89 million pounds (approximately 98 million euros at current exchange rates), already including the consideration paid for the purchase of the equity investment. With this transaction, ERG strengthens its organic growth path abroad and in particular in the UK where the secured construction capacity increases from 84 MW to 163 MW and, thanks also to the recent acquisitions in France, raises the secured capacity referring to all the objectives of the Plan which increases from approximately 40% to 70%. fiThe project, in line with the industrial strategy of
