Sale of a Deal for Alabama’s Largest Solar Energy Farm

This is another big solar project in which Longroad Energy is involved, the 379-megawatt Prospero 1 solar project in west Texas, now under construction.

A deal for the largest solar construction project in Alabama has been sold this week to a Danish alternative energy company, Orsted Energy A/S.

As with most big alternative energy projects, the project itself is still in the making at the time of the sale, with many of the terms, including the sale price, undisclosed.

The two big pieces of the deal that attracted a global buyer were the size and the agreed-on buyer of the power, the TVA.

The size is a 294-megawatt solar farm set to be built on 2,432 acres of agricultural land in Colbert County 15 miles west of Muscle Shoals.

This is the second solar farm in the Shoals region. The 600-acre river Bend Solar project, built and operated by Next Era Energy, went online in early 2016, also selling power to the TVA.

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In November 2019 TVA entered a 20-year power purchase agreement with Muscle Shoals Solar LLC, which contracted with TVA to buy the land and arrange for the project to be built. The TVA agreed to build transmission line updates and a switching substation that would be constructed and operated by TVA

Boston-based Longroad Energy Holdings LLC arranged the financing of the sale to Orsted, and Longroad will also manage construction.

The project will employ 300 workers during construction, with the project coming online in mid-2021, according to a press release by Longroad.

The largest renewable energy project in Alabama, “This project and a few others has Alabama rocketing up the state rankings in 2020 (from its 49th placing in 2019),” said pv magazine, a trade publication for the U.S. solar photovoltaics (PV) industry.

“It’s all about the economics of scale,” Longroad CEO Paul Gaynor told pv magazine. “If you have the property and interconnection capacity, adding 25 MW or 50 MW can make a meaningful difference.”

So, the sizeable chunk of property in Colbert County was one key to the deal. The TVA, the largest publicly owned utility in the nation, was another big component.

The third and make-or-break key component was tax equity financing — one party agreeing to assign the rights to claim the tax credits to another party in exchange for an equity investment.

“You have to have tax equity — we can never win a project and be competitive without it,” Gaynor told pv magazine. “The biggest issue with getting a deal completed is a reliable tax equity partner.”

Wells Fargo is the sole tax equity investor in the Muscle Shoals project, Longroad says in its release.

“Wells Fargo is pleased to provide tax-equity financing for significant projects – like Muscle Shoals – that contribute to a more sustainable future,” said Andrew Kho, head of originations for Wells Fargo’s Renewable Energy & Environmental Finance group, according to the Longroad release.

During construction, more than $1 million in sales and use tax revenue is expected to be generated, the release also said. In the first 20 years of operations, the project is expected to deliver over $15 million in incremental property taxes, much of which will be directed to education.

Based in Skærbæk, Denmark, Ørsted A/S ranks #1 in Corporate Knights’ 2020 index of the Global 100 most sustainable corporations in the world and is recognized on the CDP Climate Change A List as a global leader on climate action. Ørsted’s shares are listed on Nasdaq Copenhagen (Orsted). In 2019, the group’s revenue was DKK 67.8 billion (EUR 9.1 billion).

According to the office of the Alabama Secretary of State, Muscle Shoals Solar LLC is a foreign registered LLC that first registered with the state on August 1, 2018. Signing for the company was as Beth Deane, who is assistant general counsel for San Francisco-based First Solar Inc., which has developed and operates many of the world’s largest grid-connected photovoltaics power plants. It also makes the advanced solar panels and grids that will be part of the Muscle Shoals project, says pv magazine.

According to pv magazine, these are the solar construction, engineering and technology companies involved in the Muscle Shoals project:

  • The Engineering, Procurement and Construction company (EPC) Swinerton Renewable Energy
  • Modules will be First Solar’s Series 6 technology
  • Inverter supply with Power Electronics
  • Tracker supply with Nextracker

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