Ørsted Secures $680 Million Tax Equity Financing for Solar and Storage Projects in Texas and Arizona

Renowned renewable energy developer Ørsted has announced the successful procurement of a $680 million tax equity financing for a portfolio of solar and storage assets located in Texas and Arizona.

The project portfolio comprises the Eleven Mile Solar Center, a 300 MW solar and 300 MW / 1200 MWh storage project situated in Pinal County, Arizona, and the Sparta Solar project, a 250 MW solar installation located in Mineral, Texas.

The tax equity investment, facilitated by J.P. Morgan, includes production tax credit (PTC) and investment tax credit (ITC) assets made available through the Inflation Reduction Act (IRA). With over 1.8 GW of Ørsted’s 5.7 GW portfolio now supported by the investment bank, the partnership marks a significant milestone in advancing renewable energy initiatives.

Under the agreement, the Eleven Mile Solar Center will benefit from a one-time investment tax credit for its battery storage system, while the solar farm will generate production tax credits over a ten-year period.

This tax equity partnership leverages the option for tax credit transferability introduced by the IRA, opening new avenues for corporate buyers to support clean energy projects while optimizing their federal tax liabilities through the purchase of tax credits.

James Giamarino, Chief Commercial Officer for the Americas at Ørsted, expressed enthusiasm for the collaboration, stating, “With this new market unlocked by the IRA, we’re excited to continue our tax equity partnership with J.P. Morgan and bring on new entities looking to advance the U.S. renewable energy industry, support job growth, and promote local economic development.”

Legal counsel for Ørsted was provided by Latham & Watkins LLP, while Milbank LLP served as legal counsel for J.P. Morgan.

The tax equity investment is expected to facilitate the completion of the two projects, totaling 550 MW solar capacity and 300 MW, with a 4-hour duration energy storage component. Commercial operations for both projects are anticipated to commence in 2024, contributing an estimated combined $125 million in tax revenue over the lifespan of the projects to support public services in the local communities.

This financing marks a significant step forward in Ørsted’s commitment to advancing renewable energy infrastructure and underscores the growing momentum towards sustainable energy solutions in the United States.