Ørsted, a leading U.S. clean energy developer, announced an investment from J.P. Morgan for tax equity financing for a portfolio of solar and storage assets in California and Texas. The project portfolio consists of Eleven Mile Solar Center, a 300 MW solar and 300 MW / 1200 MWh storage project in California, and Sparta Solar, a 250 MW solar project in Mineral, Texas. This deal represents one of the largest solar and storage tax equity transactions that uses a combined production tax credit (PTC) and investment tax credit (ITC) structure since the passage of the Inflation Reduction Act (IRA) in 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 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 optimize their federal tax bill through the purchase of tax credits.
“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 Neil Durrant, Ørsted’s Senior Vice President and Head of Onshore for the Americas. “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 U.S. 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 550 MW of solar capacity and 300 MW 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 1.8 GW of Ørsted’s total 5.7 GW onshore portfolio in the United States. By the end of 2024, Ørsted will have a portfolio of solar projects generating 2 GW of power across the country.
Sparta Solar is part of the Helena Energy Center, a combined 518 MW wind and solar project in Oklahoma and Ørsted’s first co-located wind and solar project. Additionally, Eleven Mile Solar Center is Ørsted’s first project in California. The solar projects will contribute a combined $3.4 million in tax revenue over the life of the projects for public services in the local communities.
Latham & Watkins LLP served as legal counsel for Ørsted and Milbank LLP served as legal counsel for J.P. Morgan.
