Short list: Renewable Energy Deal of the Year 2020

The $300 million construction financing for LS Power’s Bolt energy storage portfolio was the first non-recourse project financing of a battery storage portfolio of its scale in California – coming in at 490 MW/1,525 MWh – and one of the first standalone storage financings to hit the market. The sponsor secured a $300 million construction debt package from a bank club for the three-project portfolio, which includes the 250 Gateway Energy Storage project, touted as the largest battery storage asset in the world. Adding to the uniqueness of the financing is that the portfolio is largely merchant, with only some phases of the projects contracted for adequacy with Pacific Gas & Electric, and with Southern California Edison for capacity.

The deal closed on September 4, 2020. Coverage here.

Sponsor: LS Power

Deal value: $300 million

Joint lead arranger and bookrunner: Royal Bank of Canada

Lenders: BNP Paribas, ING Capital, MUFG and BNY Mellon

Sponsor’s counsel: Latham & Watkins

Lenders’ counsel: Shearman & Sterling and Bryan Cave

Independent engineer: Lummus Consultants International

Market consultant: PA Consulting Group

Insurance Consultant: STANCE Renewable Risk Partners

Calpine Corp’s $1.1 billion refinancing of its Geysers geothermal portfolio represented one of the first large-scale project financings to close post-COVID. The sponsor had made an abortive attempt to finance the 13-project portfolio in 2019, with a $2 billion quadruple-tranche hybrid bank loan and bond offering, but withdrew the deal after the Kincade wildfires broke out in the Geysers geothermal field. The fact that the portfolio’s largest offtaker is Pacific Gas & Electric Corp only made the deal more challenging, but the sponsor returned to the market with a smaller and simpler bank loan-only deal in May 2020 that was ultimately successful.

The deal closed on June 9, 2020. Coverage here and here.

Sponsor: Calpine Corp

Deal value: $1.1 billion

Pricing: L+200 bp

Lead arrangers: MUFG (administrative agent and first lien collateral agent), BNP Paribas (syndication agent), Crédit Agricole and Natixis (green loan coordinators), Mizuho, National Bank of Canada, SMBC, SunTrust Robinson Humphrey, CoBank, Rabobank, ING Capital and DZ Bank

Sponsor’s counsel: White & Case

Lenders’ counsel: Latham & Watkins

Other advisers: DNV GL (pre-issuance verification of the green loan)

Clearway Energy Group’s tax equity and debt financing of a more than 2 GW portfolio of wind, solar and solar-plus-storage projects in four US states was among the largest renewable deals executed in 2020 and boasted a complex and creative monetization structure. The financing was coupled with the sale of the projects to a partnership between Hannon Armstrong and the sponsor’s Clearway Energy yieldco, with Hannon opting for an unusual capital structure, swapping out common equity for less risky preferred equity instead. The pref equity was invested in a holding company called Lighthouse Renewable that will own cash equity stakes in the individual projects, while the yieldco will own the remaining cash equity interests and act as managing member.

The deal closed on December 22, 2020. Coverage here.

Sponsor: Clearway Energy Group

Buyer’s counsel: Baker McKenzie

Seller’s counsel: Akin Gump, Wilson Sonsini (for the Rosamond Central project) and Orrick (for the Mesquite Star, Mesquite Sky, Black Rock projects)

Yieldco’s counsel: Perkins Coie

Lenders’ counsel: Winston & Strawn

Tax equity investors’ counsel: Hunton Andrews Kurth (for Rosamond Central) and Gibson Dunn & Crutcher (for Mesquite Star, Mesquite Sky, Black Rock)

Pattern Energy Group’s over $1.7 billion financing of its Western Spirit transmission line and wind project portfolio in central New Mexico was one of the largest renewable project financings in the US in 2020 and supported the construction of the largest single-phase renewables project in the country. The 150-mile, 345 kv AC transmission line has a capacity of 800 MW and will carry the output of the four adjacent wind farms in the portfolio, which total 1,050 MW, across New Mexico and Arizona to deliver it to California. The debt package was split between a construction loan, which will partly bridge to a tax equity investment underwritten by GE Energy Financial Services, as well as a letter of credit and back-leverage term loan.

The deal closed on December 31, 2020. Coverage here and here.

Sponsor: Pattern Energy Group

Deal size: $1.76 billion

Tax equity commitments: $900 million

Coordinating lead arranger: HSBC

Lead arrangers and joint bookrunners: CoBank (sole term loan bookrunner), Société Générale (letter of credit provider), Banco Santander, MUFG and CIBC

Sponsor’s counsel: Milbank and Skadden Arps

Lenders’ counsel: Winston & Strawn

Independent engineer and wind consultant: DNV GL

Transmission consultant: Navigant

Insurance consultant: Moore McNeil

The tax equity and debt terms for sPower’s Spotsylvania Solar Energy Center in Virginia (also called Highlander) were first circled in 2018, but the deal ultimately closed in 2020 due to long permitting battles, necessitating a unique renegotiation of PPAs and a restart of the tax equity and debt raises. In the spring of 2020, the sponsor clinched a $350 million tax equity commitment from Wells Fargo, while HSBC led an oversubscribed $700 million debt raise. The project’s offtakers include Microsoft Corp – which has a proxy revenue swap backed by an undisclosed reinsurance company – as well as Apple, Akamai and Etsy – via a traditional virtual PPA – and the University of Richmond.

The tax equity and debt financings closed on April 3 and July 14, 2020, respectively. Coverage here and here.

Sponsor: sPower

Deal value: $716.9 million

Sponsor’s financial adviser: CohnReznick Capital

Coordinating lead arranger: HSBC

Lead arrangers and joint bookrunners: CIBC, National Bank of Canada, Société Générale, CaixaBank and Citibank

Lead arrangers: Helaba and Crédit Agricole

Arranger: Banco de Sabadell

Tax equity investor: Wells Fargo

Sponsor’s counsel: Sheppard Mullins

Lenders’ counsel: Milbank

Tax equity counsel: Wilson Sonsini

Independent engineer: DNV GL

Transmission consultant: nFront Consulting

Insurance consultant: Moore McNeil

In April 2020, Engie North America raised the largest individual tax equity commitment ever signed, securing $1.6 billion in commitments from Bank of America and HSBC for a portfolio of US wind and solar projects totaling 2.3 GW. It is unusual to finance wind and solar projects together through a single tax equity structure, since the two project types make use of different forms of tax credit, with wind projects utilizing the PTC and solar projects the ITC. Additional tax equity commitments that Engie later secured for the last two assets in the 13-project portfolio brought the total tax equity financing to $2 billion. Over the summer of 2020, Hannon Armstrong acquired a 49% ownership stake in the mammoth portfolio.

The tax equity raise for the first 11 projects and subsequent two remaining assets closed on April 9 and September 4, 2020, respectively. Coverage here and here.

Sponsor: Engie

Deal value: $1.6 billion

Sponsor’s counsel: Orrick

Tax equity investors: Bank of America and HSBC

Tax equity investors’ counsel: Milbank