Arevon Energy closed financing on the Vikings solar-plus-storage project with a combination of debt financing and tax credit transfer. Arevon secured a commitment with J.P. Morgan to purchase $191 million of investment tax credits and production tax credits, among the nation’s first transactions announced to date that leverage the Inflation Reduction Act’s transferability provision. The additional $338 million debt facility was financed with MUFG, BNP Paribas, Sumitomo Mitsui Banking Corporation and First Citizens Bank, who acted as coordinating lead arrangers. National Bank of Canada also participated as a lender.
“Vikings has been a landmark project from its inception. It is one of the nation’s first solar peaker plants, and today it is one of the first utility-scale solar-plus-storage ITC and PTC transferability transactions to close since the Inflation Reduction Act passed in August 2022,” Kevin Smith, CEO of Arevon, said. “Vikings is an important project in our portfolio, representing Arevon’s ongoing commitment to powering the clean energy transition with renewable energy while using energy storage to enable solar to meet peak electricity demand and increase grid resilience.”
The IRA’s transferability tax credit provision allows for the simple transfer of tax credits from project owners to profitable taxpayers, according to the EPA’s Green Power Markets Summary. In June of 2023, the U.S. Treasury released guidance on the tax credit transferability mechanisms established by last year’s IRA. This highly anticipated announcement provided proposed regulations for credit transfers under Section 6418.
“ITC and PTC tax credit transferability is a major step forward for the energy transition, post-IRA, and we are excited to be able to leverage it on the Vikings financing structure,” Daniel Murphy, director of project finance for Arevon, said. “This solar peaking project concept is a key strategy for Arevon, and we are grateful to our financing parties for their support on this groundbreaking financing using tax credit transferability.”
Stoel Rives represented Arevon as legal counsel; Milbank served as transfer counsel; and Winston & Strawn served as lender counsel.