Dealmakers: Intersect’s $3.1 billion US solar-storage financing

• Financial close reached on massive US solar-storage portfolio
  
• Deal includes provisions to offset high proportion of uncontracted revenue
  
• MUFG and Santander among financial institutions involved

Last week saw Intersect Power confirm the $3.1 billion financial close of one of the US’ largest ever solar-storage portfolios.

The deal saw Intersect Power close an aggregate of $2.4 billion of new financing commitments and the allocation of $675 million of previously announced commitments for the construction and operation of four solar energy projects totalling approximately 1.5 GWdc of photovoltaics and 1GWh of battery energy storage.

The financing was particularly innovative because it incorporated structuring and pricing provisions designed to account for the higher proportion of uncontracted revenue in the portfolio.

Platform for green hydrogen growth

All four projects – Lumina I, Lumina II, Oberon I and Oberon II – are expected to be operational in 2023. The Lumina I and II projects, in Texas, total approximately 840 MWp of solar and the Oberon I and II projects, in California, total approximately 685 MWp of solar and + 1GWh of battery energy storage.

Notably, in addition to the deal being a major signal of Intersect’s intent in the solar plus storage market, the company’s CEO Sheldon Kimber also sought to emphasize that the projects would serve as a platform for future growth in the areas of green hydrogen and “other decarbonisation technologies”.

Boosting banks environmental credentials?

A large array of financial institutions were involved in the deal. 

MUFG and Santander served as co-lead arrangers on the approximately $1.6 billion construction financing with NORD/LB, KeyBanc Capital Markets, Helaba, CoBank, Bank of America, and Zions Bancorporation acting as joint lead arrangers. CoBank ACB is providing operational letters of credit to the Oberon I & II and the Lumina II projects.

Concurrent with the closing of the construction financing, Intersect secured approximately $775 million of commitments from tax equity investors, including Morgan Stanley Renewables Inc. (Oberon II), as well as what was described as a "Fortune 100 technology company" (Lumina I), and U.S. Bank (Oberon I and Lumina II).

One of the big attractions of the deal for the financial institutions involved is that it boosts their credentials as organisations that take environmental concerns seriously. As Jon Peeples, environmental finance business development director with US Bancorp Community Development Corporation, put it: “Investments like these are a tangible way US Bank can be a responsible steward of the environment and combat climate change while creating jobs and positively impacting local communities.”

Which legal and financial advisers were involved?

Intersect and its partners were represented by the following counsel and advisors on the deals: Orrick Herrington & Sutcliffe represented Intersect as lead counsel on all transactions and Kirkland & Ellis LLP served as Intersect’s special tax counsel; CCA Capital LLC advised Intersect on the tax equity transactions; Greenberg Traurig served as counsel to US Bank; Milbank LLP served as counsel to the tax equity investor on Lumina I; Mayer Brown LLP served as counsel to Morgan Stanley Renewables Inc.; Skadden, Arps, Slate, Meagher & Flom LLP served as counsel to HPS; and Winston & Strawn LLP served as counsel to the construction lenders.

Who were the key dealmakers?

So who were the individuals responsible for putting together what is not only one of the largest financings in the solar-storage sector, but also one of the most innovative? Here, Energy Storage Report gives you a run-down of the key dealmakers involved. 

Sheldon Kimber, CEO and co-founder, Intersect Power
Formerly COO of Recurrent Energy, Kimber led the company from a small-scale, rooftop developer to a utility-scale platform, with nearly 2GW of projects in operation. Prior to that, he spent five years at Calpine, working on the finance and development of gas-fired power projects. He also worked as an investment banker at Goldman Sachs, and in Accenture’s strategy consulting practice.

Louise Pesce, managing director of project finance, MUFG
Acclaimed for her vast experience in the renewables sector, Pesce is recognised as being one of the leading bankers operating in the energy industry and has led on a number of innovative deals in the sector. Pesce has raised questions in the past about whether lithium-ion is a “transitory battery” and the possibility of it being usurped by sodium ion, zinc and flow battery technology.

Nuno Andrade, managing director and head of structured finance US, Santander Corporate & Investment Banking
New York-based Andrade has been with Santander for more than 14 years. He is responsible for the origination and structuring of non-recourse and acquisition financing in the US and Canada. Andrade manages a project finance team that, since 2008, has arranged and originated more than 100 transactions totalling more than $55 billion in financing.

Jackie Bove, managing director and head of project finance, CoBank
Bove leads a team with a $6 billion loan portfolio consisting of more than 130 project finance borrowers including wind and solar power generation projects. She previously spent eight years as managing director in CoBank’s capital markets division where she led a team that developed financing structures and syndication strategies to meet the capital needs of energy, telecommunications and agribusiness companies.

Jon Peeples, environmental finance business development director, US Bancorp Community Development Corporation
Peebles has been with US Bancorp for nearly nine years – prior to that he was a financial analyst at Tradewind Energy.

Jorge Iragorri, managing director and head of the alternative financing group, Morgan Stanley
Iragorri has been with Morgan Stanley for 20 years and has been involved in a number of solar-storage financings in the US. Previous deals Iragorri has been involved in have included a $250 million financing for Distributed Solar Development, which is backed by BlackRock Real Assets’ Global Renewable Power platform and GE Renewable Energy.

John Donaleski, partner, Orrick Herrington & Sutcliffe
Orrick represented Intersect as lead counsel – the firm’s partner John Donaleski was a key member of the team. His expertise includes representing sponsors, debt providers (including commercial banks, debt funds and other financial institutions) and equity providers (such as energy and infrastructure and private equity funds) on financings and acquisitions in the renewable power sector, especially in the solar and wind industries.

Image (Clockwise from top left): Jon Peeples (US Bancorp); Louise Pesce (MUFG); Sheldon Kimber (Intersect Power); and John Donaleski (Orrick Herrington & Sutcliffe)