Renewable Energy Finance: Clearway Energy secures $1bn in project financing for 265 MW Victory Pass and 384 MW Arica solar + storage projects in California

published on 11 April 2023
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The financing package comprises construction loans and letters of credit from a consortium of lenders including MUFG, Sumitomo Mitsui Banking (SMBC), and Societe Generale. Clearway has also arranged committed tax equity and a long-term common equity partner to invest in the projects once they are brought online, which is expected by the end of the year. 

Victory Pass and Arica are both located in California’s Riverside County and cumulatively host 186 MW of four-hour battery energy storage system (BESS) capacity, supplied by Fluence. Output from the projects will be off-taken by a group of community choice aggregators (CCAs) utilities and corporate customers including Silicon Valley Clean Energy Authority (SVCE), Clean Power Alliance (CPA), and PepsiCo.

Currently, AIP Management holds a 60% stake in the projects following a $400mn investment in Jan’23. Clearway owns the remaining 40% stake. 

Enerdatics observes that the latest financing represents a project investment metric (total investment value in $mn/nameplate capacity in MW) of 1.54, which is consistent with metrics for solar + storage assets seen in the state. Our research shows that for solar projects proposed during the last 2-3 years, the investment metric for plants with co-located BESS is 25% higher than the metric for those without. Recently, Leeward Renewable Energy secured a $403mn debt + tax equity financing package for its 262 MW Chaparral Springs project, implying an investment metric of $1.53mn/MW. Several other projects with similar metrics, including the 200 MW Aratina solar Centre 1 - owned by Avantus, and the 160 MW Scarlet solar energy project - owned by EDP Renewables, are yet to secure financing. 

As ~97% of the projects in CAISO’s interconnection queue have a co-located BESS component, Enerdatics expects to see additional debt + tax equity transactions for projects in the state. The inflow of capital will enable developers to bring necessary storage capacity online in a market significantly impacted by grid curtailment and stability issues. A recent report claimed that California witnessed ~2.4 TWh of power curtailments in 2022, primarily due to oversupply. The forecasted buildout of BESS capacity will help balance the grid, regulate power prices, and increase the value of renewable energy projects in the state.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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