Ørsted closes $680m in tax equity financing for US solar+storage portfolio

Clean energy developer Ørsted has 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, US.

The project portfolio consists of Eleven Mile Solar Center, a 300MW solar and 300MW /1200MWh storage project in Pinal County, Arizona and Sparta Solar, a 250MW solar project in Mineral, Texas.

This deal represents one of the largest solar and storage tax equity transactions using a combined production tax credit (PTC) and investment tax credit (ITC) structure since the passage of the Inflation Reduction Act (IRA) in August 2022.

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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 with J.P. Morgan includes the option for tax credit transferability. This new tax credit transfer option, created by the IRA, opened a new market for any corporate buyer to support clean energy projects and optimise their federal tax bill through the purchase of tax credits.  

"Ørsted is an experienced developer and operator of renewable energy projects in the US, including offshore and onshore wind, solar, and battery storage, 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 tax equity investment will help fund the completion of both projects, which totals 550MW of solar capacity and 300MW of battery energy storage with the capacity to discharge for 4 hours (1200MWh). Commercial operations for both projects are expected to commence in 2024. The agreement also builds on J.P. Morgan's existing investments in 1.8GW of Ørsted's total 5.7GW onshore portfolio in the United States.  

By the end of 2024, Ørsted will have a portfolio of solar projects generating 2GW of power across the United States. Sparta Solar is part of the Helena Energy Center, a combined 518MW wind and solar project in Bee County and Ørsted's first co-located wind and solar project.

Additionally, Eleven Mile Solar Center is Ørsted's first 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. 

Originally published on renewableenergyworld.com