Article Summary –
Denmark’s Orsted has secured a $680m investment from JPMorgan for two US renewable energy projects spurred by the Biden administration’s Inflation Reduction Act. The investment will fund the Eleven Mile Solar Center in Arizona and the Sparta Solar project in Texas. The Inflation Reduction Act allows tax credits from these projects to be sold to third parties, opening up more investment opportunities.
Danish Developer Orsted Secures $680 Million Investment From JPMorgan for US Solar Projects
Orsted, a Danish renewable energy developer, has secured a $680 million investment from JPMorgan for two US-based projects. The investment came as a result of incentives from the Biden Administration’s Inflation Reduction Act (IRA), fueling a clean energy boom in the US.
JPMorgan will provide tax equity financing for Orsted’s Eleven Mile Solar Center, a 600-megawatt solar and storage project in Coolidge, Arizona, and the 250-megawatt Sparta Solar project in Mineral, Texas.
The Eleven Mile Solar project includes over 857,000 solar panels and 2,000 batteries from domestic manufacturers First Solar and Fluence, along with tracking systems from Nextracker. This project qualifies for a one-time investment tax credit and an annual credit from a production tax credit for the solar array, both extended under the IRA.
However, tax equity partnerships, a prevalent funding method in clean energy projects whereby large financial institutions provide part of the funding in exchange for the project’s tax credits, have traditionally been complex and limited. The IRA aims to change this by allowing credits to be transferred to a third party, broadening the pool of potential capital from corporations looking to offset tax bills. This opportunity for tax credit transfers could potentially reach $47 billion in 2024, and rise to over $100 billion by 2030.
Construction on the $1 billion Eleven Mile Solar project began in January 2023 and, once completed later this year, will have the capacity to power approximately 65,000 homes. Two-thirds of this power will be utilized for a new Meta Platforms data center under construction in the vicinity. The power is being sold to local utility Salt River Project, which will then sell it to Meta.
With electricity consumption expected to triple between 2022 and 2030 due to the growth of data centers, there is significant market opportunity for renewable energy developers. “We’ve been working in the US for over 10 years, and this is probably the best time as a renewable energy developer to be working here in the US,” said Melissa Peterson, head of onshore and origination at Orsted.
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