Dive Brief:
- Pattern Energy Group announced last week it secured $11 billion in financing for its SunZia Transmission and SunZia Wind projects, which together represent the “largest clean energy infrastructure project in U.S. history,” according to the company.
- The energy developer said full construction had begun on both projects, which include a 550-mile high-voltage direct current transmission line to transport power to western states and a 3,515 megawatt wind facility in New Mexico.
- The scale of the project and the associated financing are evidence “the renewable energy space can secure attractive capital at levels previously only seen in traditional [power] generation,” Executive Vice President Daniel Elkort said in the release.
Dive Insight:
Pattern Energy’s latest round of funding includes $8.8 billion in green construction and term loans and $2.25 billion in an “innovative” tax equity term loan. The financing package consists of an integrated construction loan and letter of credit, two separate term loans, a letter of credit for its operating phase, the tax equity term loan and a holding company loan.
BNP Paribas, Crédit Agricole Corporate and Investment Bank, Societe Generale and Wells Fargo helped arrange the green loans, while Bank of America and branches of Spain’s Santander group worked on the tax equity loan. The tax equity loan fronts Pattern Energy funds based on expected tax credits for building renewable energy infrastructure.
Nomura Securities International, Inc. and a subsidiary of the Canada Pension Plan Investment Board helped tie the financing together by acting as a holding company to provide initial capital for the project.
The project builds on Pattern’s existing portfolio of 30 renewable energy facilities, which include wind, solar, transmission, and energy storage projects.
Pattern Energy CEO Hunter Armistead said the company hopes the financing “serves as an example for other ambitious renewable infrastructure initiatives that are needed to accelerate our transition to a carbon free future.”
The SunZia Wind facility is being built in New Mexico across three counties, and the company said it is the largest wind project in the Western Hemisphere. The SunZia Transmission project is being built from central New Mexico to south-central Arizona with the capacity to transport up to 3,000 MW of energy across western states. The HVDC line is being developed in partnership with New Mexico’s Renewable Energy Transmission Authority.
The engineering, procurement and construction work for the transmission project was contracted to Quanta Infrastructure Services Group, with Quanta subsidiary Blattner Energy doing EPC contracting for the wind project. Hitachi Energy will provide the HVDC line and GE Vernova and Vesta are providing the wind turbines for the project.
The construction of the transmission line, however, has come with its own set of challenges. The project came to a screeching halt in November, after Native American tribes in Arizona argued the federal government ignored concerns that constructing the transmission line led to the bulldozing of historic sites. The Tohono O’odham Nation was joined in its Oct. 31 stoppage call by the San Carlos Apache Tribe, with other tribes in New Mexico and the southwest also raising concerns.
Attention to transmission has ramped up in recent years as a growing interconnection queue backlog has delayed renewable energy projects from getting connected to the nation’s electric grid. The Federal Energy Regulatory Commission finalized a “first-ready, first served” process for queue interconnections in July to speed up the connection process and weed out projects with little chances of being built.
FERC and PJM Interconnection, the latter of which handles transmission and wholesale power markets for 13 states, also each unveiled plans to integrate future-looking analysis into their transmission planning process.
FERC Chair Willie Phillips called the agency’s transmission planning and cost allocation rule a “chief” agency priority in November, adding future planning needs to take into account customer demand and a changing resource mix. FERC’s rule is expected to use scenarios that look ahead as much as 20 years, while PJM’s long-term transmission planning process will have operators look up to 15 years away. The regional operator’s plan includes three scenarios to account for maintaining reliability in the near-term, state energy policies and one incorporating state energy policies and expectations of wider electric vehicle adoption and other power generation developments.
