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The investment will support the construction and operation of a two-project portfolio comprising the 346 MW Oxbow Solar in Louisiana and the 135 MW Conway Solar park in Arkansas. The projects are expected to come online in late 2023. Oxbow Solar is backed by corporate power purchase agreements (PPAs) with Mcdonalds' and eBay, while Conway Solar will sell the power it produces to electric utility Conway Corp. With the financing, Wells Fargo joins a consortium of seven other global financial institutions that are supporting this portfolio, which are HSBC, ING Capital, Societe Generale, NatWest, Intesa Sanpaolo, Standard Chartered, and Allied Irish Banks. Lightsource bp had previously raised $533mn in Jan '22 from the consortium as part of a multi-project financing package, comprising debt and equity commitments.
In Feb’21, Wells Fargo announced that its Renewable Energy & Environmental Finance (REEF) had surpassed $10bn in tax equity investments in wind, solar, and fuel cell projects. Wells Fargo made its first tax-equity commitment to a wind project in 2006 and has since then expanded its scope to distributed energy projects and solar-plus-storage assets. In Nov’21, the firm made its first tax equity investment in a solar park co-located with a storage facility, being developed by DE Shaw Renewable Energy Investments (DESRI) in New Mexico.
Benefits of tax equity investments include Production Tax Credits, Investment Tax Credits, and accelerated depreciation, all of which were introduced by the federal government to incentivize renewable energy funding. However, since most developers lack the capacity to secure the maximum amount of credits available for the project, tax-equity investors swoop in to maximize returns on the asset. With the expansion of the tax credits outlined in the recently approved Inflation Reduction Act (IRA), the Enerdatics research team expects tax equity financing to rival conventional debt and equity instruments by 2030.
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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