Ørsted Secures Tax Equity Financing for Solar and Energy Storage Portfolio

Ørsted, a Danish renewable energy company, secured $680 million in tax equity financing from J.P. Morgan to develop solar and energy storage projects in Arizona and Texas, U.S. The portfolio consists of Eleven Mile Solar Center, a 300 MW solar with a 300 MW/1200 MWh storage project in Pinal County, Arizona, and a 250 MW Sparta Solar project in Mineral, Texas.

Latham & Watkins served as legal counsel for Ørsted, and Milbank served as legal counsel for J.P. Morgan.

The transaction uses a combination of production tax credit (PTC) and investment tax credit (ITC) structure provided under the Inflation Reduction Act (IRA) passed by the U.S. administration in August 2022. The Eleven Mile Solar Center will receive a one-time investment tax credit for its battery storage system, while the solar project will generate production tax credits over a 10-year period. The tax equity partnership with J.P. Morgan includes the option of tax credit transferability.

The funding will be used to develop projects with 550 MW of solar capacity and 300 MW of energy storage with a discharge capacity of 4 hours (1,200 MWh). Commercial operations for both projects are expected to commence in 2024.

“Ørsted is an experienced developer and operator of renewable energy projects in the U.S., 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.

According to Mercom’s Q1 2024 Solar Funding and M&A report, large-scale project funding announced in Q1 2024 came to $13 billion in 62 deals, a decrease of 24% QoQ compared to $17.1 billion in 60 deals in Q4 2023.

Masdar (Abu Dhabi Future Energy Company PJSC), a UAE-based renewable energy project developer, recently secured $159 million in financing for the development of a 250 MW solar project combined with a 63 MW battery energy storage system (BESS) in the Alat district of the Bukhara region, Uzbekistan.