About Talasol, Spain

Talasol is promoting the construction of a photovoltaic plant with a peak capacity of 300 MW in the municipality of Talaván, Cáceres, Spain. Ellomay acquired Talasol's shares for an aggregate consideration of Euro 10 million (with Euro 2 million held in escrow).

Based on current technical analysis of the design provided by the EPC contractor of the Talasol Project, the P50 expected production of the Talasol Project is approximately 561 GWh per annum. It is expected that the Talasol Project's CAPEX will amount to approximately Euro 200-230 million, including development costs of approximately Euro 20 million and interest of approximately Euro 7 million. Based on the current technical analysis, a price projection analysis and the expected hedging effect of the PPA, the Talasol Project's revenues are currently expected to be in the range of Euro 20-25 million per annum. The expected operation expenses are Euro 6 million per annum, thus the net operation income, revenues net of operation expenses, is expected to be Euro 14-19 million.

During June 2018, Talasol entered into an engineering, procurement & construction agreement (the "EPC Agreement") with METKA EGN Limited ("METKA EGN"). The EPC Agreement provides a fixed and lump-sum amount of Euro 192.5 million for the complete execution and performance of the works defined in the EPC Agreement. The works include the engineering, procurement and construction of the Talasol Project and the ancillary facilities for injecting power into the grid, including a 400 kV step-up substation, the high voltage interconnection line to the point of connection to the grid and performance of two years of O&M services. METKA EGN is expected to complete the works under the EPC Agreement within a period of 16 months.

In June 2018, Talasol executed a financial power swap in respect of approximately 80% of the output of a prospective photovoltaic plant for a period of 10 years (the "PPA"). The PPA was executed with a leading international energy company with a solid investment grade credit rating and a pan-European asset base, which is active in more than 40 countries and has a proven track record in financial hedges. The power produced by the Talasol Project is expected to be sold in the open market for the then current market power price and the PPA hedges the risks associated with fluctuating electricity market prices by allowing Talasol to secure a stable income for the power production included under the PPA.

In July 2018, Talasol executed a pre-hedge transaction with Goldman Sachs International in connection with the prospective project financing for the construction of a photovoltaic plant. The pre-hedge transaction is a fixed for floating interest rate swap intended to lock-in current market floating rates.

In December 2018, Talasol entered into a set of agreements governing the procurement of financing in the aggregate amount of approximately Euro 177 million (the "Project Finance"). The Project Finance is intended to finance the development and construction of the Talasol Project. The Project Finance is expected to be financed by a consortium led by Deutsche Bank, which is the mandated lead arranger, and the European Investment Bank (EIB).

Location

Municipality of Talaván, Cáceres, Spain