Capital Energy loses multi-million dollar arbitration with Saudi Alfanar over its wind power dispute

Spain has reaped another defeat in the arbitration courts. To the numerous rulings against the State for the complaints of international investment funds for the cut in returns to renewable energies and the recent loss of the litigation of Real Madrid against Mubadala, the sovereign wealth fund of Abu Dhabi, is now added the outcome of the claim that Capital Energy, the electricity company controlled by the Buezas family, had filed against the Saudi multinational Alfanar.

The conflict began at the end of 2018, when Alfanar Company filed a request for arbitration before the Court of Arbitration of the International Chamber of Commerce in Paris. The Arab group sued the Spanish group and several of its subsidiaries, Capital Energy Proyectos Energéticos, Capital Energy Solar Eólica and Green Capital Power, for alleged breach of a shareholding contract signed by the parties in July 2017, according to official documentation accessed by this newspaper.

Alfamar Company, based in Riyadh and present in Spain since 2017, claimed 7.53 million for the acquisition of some shares and 5.71 million for the amounts derived from the eventual execution of the guarantees constituted in relation to the renewable auction. The arbitration fell on the side of the Saudi multinational, but Capital Energy filed an appeal for annulment of the award. According to legal sources, the court has recently dismissed this request, so the renewable energy company led by Martín Buezas will also have to pay one million for costs.

Capital Energy has already made provisions in 2021 for the litigation with Alfamar, so it considers that the recent ruling will not have any further impact on its accounts, except for the aforementioned costs. A relief, because that year the company recorded losses of 40 million euros, a record figure, which, in the absence of the official closing of 2022, Buezas has managed to straighten out. In large part, thanks to the sale of a series of wind farms to the Austrian group Verbund for 65 million, money that was largely used to repay a debt with high interest rates for 40 million.

In addition, the company transferred 25,000 customers to Repsol for some five million and implemented a labor force reduction plan (ERE) for part of the workforce of its electricity marketing subsidiary. A decision included in the reorganization plan proposed by the group's management to focus the commercialization business on large and medium-sized customers, mainly industrial.

Alfanar landed in the renewable energy business in Spain in 2017, when it emerged as the main winner of the renewable energy auction held by the Government. Specifically, the Saudi firm won 720 MW of wind power capacity out of the 1,130 MW that the Executive awarded under the regulated remuneration regime. A year later, the company applied to the European Investment Bank (EIB) for 385 million Euros to carry out an investment valued at 643 million Euros to develop 21 wind farms of between 8 MW and 50 MW, with an installed capacity of 547 MW (163 wind turbines), located in Andalusia, Asturias, Castilla-La Mancha, Castilla y León, Galicia and Navarra.

The Saudi firm was awarded 720 MW of wind power capacity out of the 1,130 MW that the government awarded under the regulated feed-in tariff regime.

In early 2019, Alfanar announced a strategic alliance with German wind turbine manufacturer Senvion for the development of wind power projects in Spain and that same year acquired three 88.5 MW wind farms from Germany's ABO Wind. In early 2022, it closed its largest acquisition in Spain, buying a portfolio of 190 megawatts (MW) of wind power in Navarra for about 200 million. Specifically, it acquired 100% of Agrowind Navarra 2013, until now 50% owned by the Navarre company Canaliza Energía, a company linked in the past to Caja Navarra and CaixaBank (Hiscan).

Spain has reaped another defeat in the arbitration courts. In addition to the numerous rulings against the State due to the complaints of international investment funds for the cut in the yields of renewable energies and the recent loss of the litigation of Real Madrid against Mubadala, the sovereign wealth fund of Abu Dhabi, there is now the outcome of the claim that Capital Energy, the electricity company controlled by the Buezas family, had filed against the Saudi multinational Alfanar.