Macquarie Capital’s Green Investment Group and Advanced Microgrid Solutions have closed the third and final tranche of debt financing for their 63 MW/340 MWh Electrodes behind-the-meter distributed battery storage portfolio in California.
CIT Bank led the $160 million deal, parceling out tickets to prior lenders to the project Rabobank and Sumitomo Mitsui Banking Corp. as well as new participant ING Capital.
The debt raise backs battery units at 89 sites for 28 different hosts in Los Angeles and Orange counties. The deal closed on Friday, March 22.
Macquarie and AMS had already drawn down additional funds at the end of last year under the existing $100 million facility, which backed deployed projects totaling 35 MW, by using the accordion feature that was baked into the loan (PFR, 12/21).
The final pricing and tenor of the latest transaction could not immediately be learned. Dan Cary, the Macquarie Capital vice president who oversaw the Electrodes deals, declined to comment.
Mainstream project finance lenders were drawn to the first-of-its-kind standalone storage deal by the stacked revenue streams that Electrodes benefits from, including a 10-year capacity contract with Southern California Edison (PFR, 9/12/18).
California’s Self-Generation Incentive Program (SGIP) and peak demand shaving service fees from individual hosts/customers are layered into the deal as additional contracted revenues, PFR understands.
The portfolio was conceived with a capacity of about 50 MW but Macquarie intentionally “over-built” the systems to take advantage of merchant power prices and unlock other uncontracted value streams like frequency control, black-start services and voltage management.
“You’re not dealing with a new technology—just a new application,” says a banker close to the deal. “There was a lot of due diligence because there were so many different projects, offtakers, technology providers, EPCs, etc.”
While Tesla is the main technology provider for the portfolio, Lockheed Martin was also brought in to supply battery systems for a few of the sites, PFR can reveal.
The project finance loans are not rated and the credit agreements are understood not to include provisions that alter the terms of the financing in response to changes in the credit rating of the main offtaker, SCE. The utility was downgraded by rating agencies recently as a result of a reassessment of wildfire-related risks (PFR, 3/15).
With another tranche of financing wrapped up, Macquarie is looking to grow its San Francisco-based energy technology and solutions team, which is led by former Telsa staffer Greg Callman (PFR, 6/18). The Australian firm is said to be eyeing storage procurement activity in New York state.