Arevon Energy Inc. is using $529 million package to build the Vikings solar-plus-storage project in Southern California. The project is one of the first utility-scale solar peaker plants in the United States. The company’s innovative financing approach combines the Inflation Reduction Act’s tax credit transferability provisions with traditional debt financing.
Arevon has closed financing, securing a commitment with J.P. Morgan to purchase $191 million of investment tax credits and production tax credits, among the nation’s first transactions announced to date that leverage the IRA’s transferability provision. The additional $338 million debt facility was financed with MUFG, BNP Paribas, Sumitomo Mitsui Banking Corp. and First Citizens Bank, which acted as coordinating lead arrangers. National Bank of Canada also participated as a lender.
Located in Imperial County, California, the Vikings power plant features a unique configuration of 157 MWdc of solar coupled with 150 MW/600 MWh of battery energy storage. The project is contracted to provide resource adequacy and renewable energy to San Diego Community Power, helping to support grid reliability beginning in 2024.
“Vikings has been a landmark project from its inception. It is one of the nation’s first solar peaker plants, and today it is one of the first utility-scale solar-plus-storage ITC and PTC transferability transactions to close since the Inflation Reduction Act passed in August 2022,” said Arevon CEO Kevin Smith. “Vikings is an important project in our portfolio, representing Arevon’s ongoing commitment to powering the clean energy transition with renewable energy while using energy storage to enable solar to meet peak electricity demand and increase grid resilience.”
The project showcases key U.S. manufacturers, with PV module supply from Tempe, Arizona-based First Solar, along with solar trackers from Nextracker, which is headquartered in Fremont, California. Tesla is supplying the facility’s utility-scale batteries, which allow the solar energy generated to be directed to the grid during peak demand, powering up to 50,000 homes. Construction of the facility is well underway, with commercial operations scheduled for the third quarter of 2024. San Diego-headquartered SOLV Energy is performing the construction activities.
The IRA’s transferability tax credit provision allows for the simple transfer of tax credits from project owners to profitable taxpayers, according to the EPA’s Green Power Markets Summary. In June 2023, the U.S. Treasury released guidance on the tax credit transferability mechanisms established by last year’s IRA. This highly anticipated announcement provided proposed regulations for credit transfers under Section 6418.
“ITC and PTC tax credit transferability is a major step forward for the energy transition, post-IRA, and we are excited to be able to leverage it on the Vikings financing structure,” said Daniel Murphy, director of project finance at Arevon. “This solar peaking project concept is a key strategy for Arevon, and we are grateful to our financing parties for their support on this groundbreaking financing using tax credit transferability.”
Stoel Rives represented Arevon as legal counsel; Milbank LLP served as transfer counsel; and Winston & Strawn LLP served as lender counsel.
Tags: Arevon Energy, BESS, energy storage, First Solar, NEXTracker, solar+storage, SOLV Energy, utility-scale
