WEST PALM BEACH, FL--(Marketwired - Oct 9, 2013) - Upower, Inc. ("Upower"), an emerging independent power provider, announced today that on September 26, 2013, its majority owned subsidiary Upower Honduras, Inc. ("Upower Honduras") through its two majority owned subsidiaries, Produccion de Energia Y Demas Renovables, S.A. de C.V, a company incorporated under the laws of the Republic of Honduras ("PRODERSSA") and Pacific Solar Energy, S.A., a company also incorporated under the laws of the Republic of Honduras ("PSE"), entered into two (2) memorandums of understanding ("MOU") with Empresa Nacional de Energia Electrica ("ENEE"), the national energy company of Honduras, to develop two (2) solar projects on the Pacific Coast in the Republic of Honduras. Such MOUs generally provide for each of PRODERSSA and PSE to begin the process for each to develop the two (2) individual, 50 megawatt solar power plants. Such process includes each of PRODERSSA and PSE being required to complete an environmental impact assessment ("EIA") and a feasibility study on the land on which each of the solar powered power plants will be located and constructed. Such land has already been acquired through a land lease by each of PRODERSSA and PSE from Inmobiliaria IG S.A., a Honduran real estate company, for a parcel of land totaling approximately 420 acres. This land lease is for a term of 25 years or for as long as a power generation facility is selling power, and each of PRODERSSA, PSE, Upower Honduras or Upower has the right to purchase the land at any time after the 5th year of the land lease at its fair market value at the time of any such purchase. Once construction may commence, each of PRODERSSA and PSE will have a land lease payment obligation of $60,000 per annum payable quarterly, with a yearly interest adjustment of 1.5%. Once the EIA and feasibility studies have been completed by each of PRODERSSA and PSE, power purchase agreements ("PPAs") would have to be negotiated and finalized for each power generation facility.
Upower's President, Enrico Marotta, commented that "The MOUs are an exciting, important step in furtherance of our mission: To generate electricity by building or acquiring power plants globally, striving to maximize performance and returns for our shareholders, while remaining environmentally conscious."
The basic terms of each PPA, if finalized, of which no assurances are given, are anticipated to include an operational term of approximately 25 to 30 years, with a base price to be received by the independent power provider ("IPP") of between approximately $0.18 and $0.19 per kilowatt. Such price is anticipated to have a scaling feature that increases 10% per year for 10 years and then in years 11 and 21, respectively, would reset to the original base price of the PPA and also reset to the initial scaling feature that increases 10% per year for 10 years. These general PPA terms have already been approved by the Honduran government per current Honduran law and all PPAs once approved and executed by ENEE are then subject to ratification by the Honduran Congress.
The Honduran government has approved up to 300 megawatts of solar power contracts to be issued to IPPs with a maximum of 50 megawatts per project. Honduran law allows for terms as discussed above as well as certain tax exemptions available to any IPPs for a period of 10 years for anyone entering into one or more of such projects.
Following discussions in July 2013, Upower on August 14, 2013 submitted a letter of interest to ENEE, as is ENEE's customary procedure, to provide for the commencement of negotiations for a planned subsidiary of Upower Honduras to become the operator of a 22 megawatt thermal power plant which ENEE currently owns and operates. Such thermal plant is located in La Ceiba, Atlántida, which is on the eastern/Atlantic Ocean side of Honduras and is currently producing 5 megawatts of standby power. Subject to the negotiation and execution of a final agreement, of which no assurances are given, and the need for an as yet undetermined amount of financing, the availability and terms of which no assurances are given, a subsidiary of Upower Honduras would be responsible for operating and retrofitting the power generation facility and potentially increasing the power generation output to 30 megawatts. If an agreement is finalized, it is currently anticipated, based upon ENEE's current pricing standards, that such subsidiary would receive approximately $0.21 to $0.22 per kilowatt for the power produced for a term for approximately 20 years. Such company would also receive payments at a reduced level for standby power, if any. We currently anticipate entering into an initial MOU for such project within the next several months.
David Macias, Upower's Chief Executive Officer, said: "We are very excited about working with ENEE and the Government of Honduras to implement the terms of the MOUs and bring new sources of safe, reliable electricity utilizing conventional and renewable sources to the Republic of Honduras. We are looking forward to being a steady and long term provider of energy to Honduras for many years to come."
We continue to be involved in meetings and discussions as to other Honduran power generation projects, as well as with other off-shore jurisdictions for purposes of securing electric power generation contracts, and plan to issue press releases as new opportunities may present themselves.
UPI is an emerging independent power provider focusing on generating electricity by building or acquiring power plants globally, striving to maximize performance and returns for our shareholders, while remaining environmentally conscious.
Certain statements made by Upower, its subsidiaries and members of its management team on its behalf in this release and other periodic oral and written statements, regarding Upower's operating performance, events or developments that Upower believes or expects to occur in the future, including those that discuss anticipated financial results, strategies, goals, outlook or other non-historical matters, or which relate to future sales, earnings expectations, cost savings, growth of Upower or of the market for its products and services, or general belief in Upower's expectations of future operating results are forward-looking statements. All such forward-looking statements are subject to risks and uncertainties, including the need by Upower for substantial additional working capital to materially advance its business plan; no assurances that Upower will be able to secure such capital or the terms upon which such capital may be secured, if at all; technology and other challenges involved in the development and operation of Upower's planned products and services, including the performance of technology which may be utilized by Upower, compliance with local, regional and national power generation, environmental and related laws, and local, regional and national governmental cooperation; local, regional and national economic considerations, including residential and industrial energy demand; foreign currency effects; Upower's ability to protect its intellectual property; the ability to integrate acquisitions successfully and the risk that expected synergies may not be fully realized or may take longer to realize than expected; and competitors' product introductions, pricing and other competitive pressures, as well as other risk factors and uncertainties. Forward-looking statements included herein are made as of the date hereof, and Upower undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Actual results could differ materially from anticipated results.