2014 Renewable Energy Project that Best Demonstrates Overcoming Obstacles

Renewable Energy Power Awards Winner for Overcoming Obstacles Regulus Solar Project
Winner
Award Category: 
Overcoming Obstacles
Property Name: 
Regulus Solar Project
Developer: 
SunEdison Inc.
Owner: 
TerraForm Power Inc.
Location: 
Kern County, Calif.

Sun Edison Inc. wins the 2014 Overcoming Obstacles Award for its development of its Regulus Solar project in Kern County, Calif. Regulus Solar is an 82 megawatt direct current (MWdc) solar photovoltaic (PV) system that began operation at the end of 2014. SunEdison spent five years developing the plant on a 743-acre site that formerly hosted as many as 30 oil wells.

Sun Edison overcame financing challenges to construct it on time and on budget. Nat Eng, a principal at Novogradac & Company, which provided consulting services for this development, said there was a scarcity of capital and market liquidity, and fewer active lenders. Santander and Prudential Capital Group, the term-lending team for this project, jointly structured a banking/institutional hybrid financing model to secure funding for Regulus Solar. The hybrid financing model had two advantages: It allowed the project to tap into two pockets of liquidity, which maximized the power purchase agreement (PPA), eliminated refinancing risk and minimized the underwriting risk; and it benefited both types of lenders–Santander Bank, which was seeking capital rotation while complying with Basel III, and institutional investor Prudential, which was seeking duration. Efficient collaboration was crucial to closing the transaction. For instance, although the term debt included a 10-year and 20-year tranche, the term-lending team closed both tranches under single documentation and with shared legal counsel.

In addition, the development team structured 15 capital partnerships and combined multiple sources of funding. The total financing package was $145 million and included tax equity from Google, a construction loan from Deutsche Bank and a loan from Keybank, among others. Through a 20-year power purchase agreement, SunEdison will supply power to Southern California Edison (SCE). Eng says the project will also contribute to SCE’s fulfillment of its renewable portfolio standard requirements and California’s objective that 33 percent of its power come from renewable energy sources by 2020.

The development team says the Regulus Solar project created 650 jobs. Eng said the plant will supply clean and renewable energy to more than 10,000 housing units through SCE. The annual CO2 reduction is expected to be equal to 125 million pounds of coal.

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