Vikings solar-plus-storage project financing driven by Arevon's innovative approach to combine the Inflation Reduction Act's tax credit transferability provisions with debt in a $529 million financing package
NEW YORK and SCOTTSDALE, Ariz., Nov. 8, 2023 /PRNewswire/ -- Arevon Energy, Inc. today announced it has closed financing on the Vikings solar-plus-storage project with a combination of debt financing and tax credit transfer. Arevon secured 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 Inflation Reduction Act's transferability provision. The additional $338 million debt facility was financed with MUFG, BNP Paribas, Sumitomo Mitsui Banking Corporation, and First Citizens Bank, who acted as Coordinating Lead Arrangers. National Bank of Canada also participated as a lender.
"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," stated Kevin Smith, Arevon's CEO. "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."
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. Vikings is contracted to provide resource adequacy and renewable energy to San Diego Community Power, helping to support grid reliability beginning in 2024.
The project showcases key U.S. manufacturers, with PV module supply from Tempe, Arizona-based First Solar (NASDAQ: FSLR), along with solar trackers from Nextracker (NASDAQ: NXT), whose headquarters are in Fremont, California. Tesla (NASDAQ: TSLA) 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 of 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, Arevon's Director of Project Finance. "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.
About Arevon
Arevon Energy, Inc. is a leading renewable energy company, supplying clean energy to utilities and corporations across North America. Headquartered in Scottsdale, Arizona, and New York City, Arevon uses innovative approaches and leading-edge technology to develop, build, finance, own, and operate clean energy projects. Its financial prowess and industry expertise come together to improve the structure and performance of its platform of solar and energy storage power plants. Arevon was named one of Arizona's Top Workplaces in 2022 and 2023. For more information, please visit: www.arevonenergy.com.
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