The 127MW Arlington Valley Solar Energy II Project is now underway. LS Power has announced it has completed financing and authorized the construction of the US$550 million installation. It is to be build on more than 1,100 acres of land and operational in 2013.
The financing combines a long-term institutional financing led by Prudential Capital Group with a shorter term bank financing led by Banco Santander GE Energy Financial Services, who is participating in the solar project as an equity partner.
LS Power will sell all generated power to San Diego Gas & Electric as part of a 25-year power purchase agreement. Once completed, the project is expected to annually generate more than 275,000MW of power in the first year of operation.
“This two-tranche financial solution aligns sponsors, banks and institutional investors’ interests,” said Jorge Camina, head of project & acquisition finance US of Santander Global Banking & Markets. “It optimizes project capital structure, locks financing cost and extracts the full value of the long-term power purchase agreement, while appealing simultaneously to both the institutional and bank markets. Having Prudential as a partner has been crucial in developing a successful template. We expect many projects will follow the innovative path initiated by LS Power.”
San Diego Gas & Electric will buy the energy and Fluor Corpoation has been selected to engineer, procure and construct the project.
“We are pleased to have completed the development and commenced construction of this important solar project,” said John King, executive vice president of LS Power. “This project will bring many benefits to the State of Arizona and Maricopa County, including construction and operations jobs with local business opportunities and longer-term benefits from tax revenues. Renewable energy deliveries will assist SDG&E and the State of California in reaching their renewable energy goals.”