Danish company Orsted wins JPMorgan’s support of $680 million for US solar and battery projects – NBC Chicago

• Renewable energy developer Orsted announced Thursday that it has secured a $680 million investment from JPMorgan for two energy projects, including Eleven Mile Solar near Coolidge, Arizona.
• Eleven Mile Solar has over 857,000 solar panels and 2,000 battery cubes and will be able to power approximately 65,000 homes.
• Most of the energy generated at Eleven Mile Solar will go to Meta Platforms’ new data center in Mesa, Arizona.
• The Inflation Reduction Act boosted U.S. clean energy investment by expanding existing tax credits and introducing new incentives, including the ability to sell tax credits on the open market.

Danish renewable energy producer Orsted has secured a $680 million investment from JPMorgan in two US projects as part of incentives under the Biden administration’s signature climate bill – the Inflation Reduction Act (IRA) – to spur the US clean energy boom

JPMorgan will provide tax equity financing for Orsted’s Eleven Mile Solar Center, a 600-megawatt solar and storage project near Coolidge, Arizona, and the 250-megawatt Sparta Solar project in Mineral, Texas.

Eleven Mile Solar, which includes more than 857,000 solar panels and 2,000 batteries from domestic manufacturers First Solar and Fluence respectively, as well as tracking systems from Nextracker, is eligible for a one-off investment allowance for a storage system, as well as an annual credit from the allowance tax on the production of photovoltaic panels. Both loans were made within an IRA.

Clean energy projects have relied on tax equity partnerships for years. Put simply, large financial institutions provide part of the financing for a renewable energy project in exchange for tax breaks associated with the project. Developers themselves rarely have high enough tax bills, so partnerships allow them to monetize their loans.

But partnerships are complex and markets are limited. Smaller developers do not always have the resources to enter into such partnerships, and the appetite of large financial institutions to engage in renewable energy projects is limited.

The IRA tried to change that by adding a provision that allowed credits to be transferred to a third party, creating a new pool of potential capital from corporations looking to balance their tax bills. The project developer can either sell the credits itself, or the tax partner – in this case JPMorgan – can decide to sell the credits to another party.

Before the creation of the IRA, the tax equity market was between $18 billion and $20 billion a year, according to the American Renewable Energy Council. This is “far too small for the needs in the clean energy investment landscape after the passage of the IRA Act,” noted investment bank Evercore ISI. The bank estimates that the potential tax transfer market will reach $47 billion in 2024 and grow to over $100 billion annually by 2030.

“This is the first time we’ve been able to do something like this… and it really opens the door for many more businesses and tax-affiliated companies in the United States to come on board and help support clean energy projects,” Melissa Peterson, head of land and starting in Orsted, she told CNBC. “It’s a truly unique structure that we hope to recreate again and again.”

Construction on the $1 billion Eleven Mile Solar facility began in January 2023, and when the plant becomes operational later this year, it will have the capacity to power approximately 65,000 homes. Two-thirds of the energy will be used in the new Meta Platforms data center being built nearby. Orsted sells the power to Salt River Project – a local utility – which then sells it to Meta.

Boston Consulting Group estimates that electricity consumption in data centers will more than triple between 2022 and 2030, and by the end of the decade it will require the same amount of energy as 40 million households. Added to this is the increase in load resulting from increased electricity consumption, which means that energy demand in the US is now rising significantly for the first time in decades.

“We have been working in the U.S. for over 10 years, and this is probably the best time for a renewable energy developer to be working here in the U.S.,” Orsted’s Peterson said. “We see a lot of opportunity in the growing demand we’re seeing from reshoring of manufacturing, big tech companies, combined with things like the Inflation Reduction Act, combined with many corporations that have ambitious climate goals.”

“We really see this as the pinnacle of our capabilities,” she added.

– CNBC’s Harriet Taylor and Van Applegate contributed reporting.