Scatec has finalised a 15-year power purchase agreement (PPA) with BTG Pactual Comercializadora de Energía, a branch of Banco BTG Pactual Brazil, for a solar power project in Colombia.

The PPA is set to cover approximately 85% of the expected output from a 130MW solar facility while the remaining production will be marketed within the Colombian electricity sector.

This initiative represents Scatec's inaugural project in Colombia, which will be located in Nariño, approximately 100km west of Bogotá.

The Colombian energy market is reportedly characterised by favourable conditions, including high solar irradiation, increasing demand for renewable sources, and a conducive regulatory framework.

The country is projected to expand its solar capacity by over 5GW in the next five years, according to Scatec's press release.

The total estimated capital expenditure (capex) for the solar plant is $110m. Scatec will serve as the engineering, procurement, and construction contractor, handling about 80% of the capex.

It will also oversee operations and maintenance and asset management for the facility.

Funding for the project will be sourced through nonrecourse financing and equity, with Scatec maintaining majority ownership and Norfund participating as a minority equity partner.

Scatec is currently engaged in discussions with financial institutions to secure nonrecourse project financing, aiming for a leverage ratio of 65%.

Financial closure and the start of construction are projected for this year.

Scatec CEO Terje Pilskog said: “This agreement marks an important step for Scatec as we enter the Colombian market with a commercially robust project.

“Colombia offers a solid framework for renewable energy investments, and we are pleased to contribute to the country’s energy transition through our integrated business model.”