Watson Farley & Williams (“WFW”) advised Eavor Erdwaerme Geretsried GmbH, a subsidiary of Canada’s Eavor Technologies Inc. (“Eavor”), on a €350m investment to build its first commercial-scale Eavor-Loop geothermal project in Geretsried, Bavaria, Germany.
In addition to equity, the investment includes a €45m loan of from the European Investment Bank (“EIB”) guaranteed by the European InvestEU programme (“InvestEU”), a grant of €91.6m from the EU Innovation Fund as well as loans of approx. €87m provided by a consortium consisting of Japan Bank for International Cooperation, ING Bank N.V. and Mizuho Bank, Ltd. The investment was backed by Japan’s export credit agency Nippon Export and Investment Insurance (“NEXI”).
When completed, the project will supply heat to homes and businesses, whilst an on-site power plant will convert geothermal heat into electricity. To this end, Eavor has already signed an offtake agreement with the local municipal energy supplier. Eavor has developed the world’s first truly scalable form of clean, dispatchable, baseload capable and flexible heat and power production system through its patented Eavor-Loop technology which collects heat from the earth’s natural geothermal gradient through thermal conduction.
In contrast to conventional geothermal systems which extract heat from underground water or steam reservoirs, Eavor-Loop technology utilises heat from a specific type of underground rock. It comprises two vertical boreholes drilled to a depth of up to 5,000 metres and twelve pairs of lateral pipes leading to four loops, each around 350 KM long, through which water circulates. By eliminating the need for using pumps and re-injecting fluids during operation, greenhouse gas emissions are further reduced compared to conventional systems.
The multidisciplinary WFW Germany team that advised Eavor was led by Hamburg Project and Structured Finance Partner Sven Fretthold, supported by Senior Associate Alejandra Hagedorn and Associate Finja Schmale and Hamburg Partners Carolin Woggon and Max Boemke, supported by Associate Anastasia Khomutova, and Munich Partners Christian Bauer and Felix Siebler, supported by Transaction Lawyer Tetiana Arkhipova, also assisted. Düsseldorf Counsel Thomas Wölfl and Senior Associate Katharina Flehr provided real estate law expertise.
Sven commented: “We are delighted to have advised Eavor on this complex financing involving funds from multiple sources which also enables the first large-scale application of its highly innovative energy generation technology. Successfully completing this transaction that involved expertise spanning all core service lines once again demonstrates WFW’s ability to advise on demanding international transactions in the renewable energy sector”.
