Renewable energy developer Ørsted announced it has secured a $680 million tax equity financing for a portfolio of solar and storage assets in Texas and Arizona.
The project portfolio includes Eleven Mile Solar Center, a 300 MW solar and 300 MW /1200 MWh storage project in Pinal County, Arizona and Sparta Solar, a 250 MW solar project in Mineral, Texas.
J.P. Morgan made the tax equity investment, comprised of production tax credit (PTC) and investment tax credit (ITC) assets available through the Inflation Reduction Act (IRA). Over 1.8 GW of Ørsted’s 5.7 GW portfolio is now supported by the investment bank.
The Eleven Mile Solar Center will receive 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.
The tax equity partnership includes options for tax credit transferability, a new option created by IRA. Tax credit transfers opened a new market for any corporate buyer to support clean energy projects and optimize their federal tax bill through purchasing tax credits.
“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,” said James Giamarino, chief commercial officer for the Americas, Ørsted.
Latham & Watkins LLP served as legal counsel for Ørsted and Milbank LLP served as legal counsel for J.P. Morgan.
The tax equity investment is expected to help complete the two projects which total 550 MW solar capacity and 300 MW, 4-hour duration energy storage. Commercial operations for both projects are expected for 2024. The solar projects are expected to contribute a combined $125 million in tax revenue over the life of the projects for public services in the local communities.
