Orsted, a US clean energy developer, announced an investment from J.P. Morgan for $680 million in tax equity financing for a portfolio of solar and storage assets in Texas and Arizona.
The project portfolio comprises 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.
The solar and storage tax equity transaction used a combined production tax credit (PTC) and investment tax credit (ITC) structure since the passage of the Inflation Reduction Act (IRA) in August 2022. 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 partnership includes the option for tax credit transferability, which the IRA created to unlock a new market for corporate buyers who want to support clean energy projects and optimize their federal tax bill by purchasing tax credits.
The tax equity investment will help fund the completion of both projects, which totals 550 MW of solar capacity and 300 MW of battery energy storage with the capacity to discharge for 4 hours (1,200 MWh). The projects are expected to be commercially operational in 2024.
"Orsted is an experienced developer and operator of renewable energy projects in the US, all of which will generate tax credits valuable to investors," said James Giamarino, Chief Commercial Officer for the Americas at Ørsted. "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 US renewable energy industry, support job growth, and promote local economic development."
The agreement also builds on J.P. Morgan's existing investments in 1.8 GW of Orsted's total 5.7 GW onshore portfolio in the U.S.
Orsted will have a portfolio of solar projects generating 2 GW of power across the US by the end of 2024. While Sparta Solar is part of the Helena Energy Center, a combined 518 MW wind and solar project in Bee County, Eleven Mile Solar Center is Orsted's project in Arizona.
The solar projects will contribute a combined $125 million in tax revenue over the life of the projects for public services in the local communities. While Latham & Watkins served as legal counsel for Orsted, Milbank was a legal counsel for J.P. Morgan.
