US solar developer Vesper Energy has closed US$590 million in financing for its 600MW Hornet solar project in Swisher County, Texas.
The financing came from a group of banks through a construction-to-term loan and letter of credit facility. Significantly, Vesper said that the financing leverages production tax credit (PTC) transfer funding under the Inflation Reduction Act (IRA), with up to US$500 million PTCs expected to be monetised and leveraged thanks to the loan facility.
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A report from Crux, a tax credit transfer vehicle, found that the average size of a PTC deal in 2023 was US$60 million, priced at around US$0.94 per credit. Hornet will be one of the largest solar PV projects in the US upon completion, and far above the average PTC transfer size.
PV Tech Premium has previously covered the transformative effect that IRA credit transfers have been touted to have on the US renewable energy market.
Vesper said that the Hornet project would deploy bifacial solar modules mounted on single-axis trackers. It did not disclose a supplier, though it has previously been in supply agreements with Vietnam-based solar manufacturer Boviet Solar. Boviet was one of three manufacturers with operations in Southeast Asia found to be compliant with the US’ antidumping/countervailing duty (AD/CVD) tariffs, according to the Department of Commerce’s final determination last year.
“Closing project financing and a long-term purchase agreement for the PTCs on a large project in west Texas is complex,” said Vesper Energy CFO Robert Scheuermann. “We are proud to invest in Hornet Solar alongside top-tier lenders and investors. This closing is a testament to the value Vesper Energy generated in the asset.”
The project will be connected to the Electric Reliability Council of Texas (ERCOT) interconnection system which operates the grid in Texas. Whilst being one of the largest energy markets in the US, Texas and ERCOT is one of the most volatile areas in the US in terms of pricing, which Vesper said the Hornet project would aid in mitigating. The network is also faced with regulatory and permitting challenges that sometimes conflict with the federal IRA incentives.
According to a July 2023 report from the Energy Information Administration (EIA), ERCOT will need to invest significantly in transmission upgrades and expansion if it is to avoid significant curtailments on the vast amounts of solar and wind capacity that is expected to be deployed in its jurisdiction.
The next edition of our journal, PV Tech Power, will have a feature looking at the US tax credit transferability market both at the downstream and upstream levels and its activity in 2023.