J.P. Morgan invests $680M in Ørsted for solar and storage projects in Texas and Arizona

J.P. Morgan has committed $680 million in tax equity financing to Danish energy company Ørsted to develop new solar and storage projects in Texas and Arizona.

This financial backing is pivotal for constructing Ørsted’s large-scale solar and storage facilities, including the 300 MW Eleven Mile Solar Center in Arizona and the 250 MW Sparta Solar project in Texas. The financing leverages a unique financial structure that combines both the production tax credit (PTC) and investment tax credit (ITC), showcasing one of the most significant applications of this method since the implementation of the Inflation Reduction Act (IRA) in 2022.

The IRA, a cornerstone of President Biden’s climate policy, directs nearly $370 billion toward renewable energy, industrial decarbonization, and other environmentally focused initiatives. A notable feature of the IRA is its introduction of transferable tax credits, designed to enhance private sector investment in green energy projects.

Regulations can be designed so that energy storage systems charge up with excess electricity from wind and solar, which is a step toward making storage cleaner. petrmalinak/Shutterstock

Ørsted highlights the strategic advantage offered by the IRA, allowing corporate buyers to invest in clean energy projects while optimizing their federal tax liabilities by acquiring tax credits.

The Eleven Mile Solar Center, which also includes a 300 MW storage facility, will benefit from an investment tax credit for its storage capabilities, while the solar components will receive production tax credits over a decade. Similarly, the Sparta Solar project will capitalize on these fiscal incentives to reach operational status later this year.

These projects are not just significant for their size and funding but also for their strategic partnerships. For instance, a notable agreement with Meta will see a significant portion of the Eleven Mile Solar Center’s output directed to power Meta’s data center in Mesa, Arizona. This aligns with Meta’s sustainability goals and Ørsted’s expansion plans in the U.S. market.

The deal also deepens the relationship between Ørsted and J.P. Morgan, which has previously invested in 1.8 GW of Ørsted’s onshore projects in the U.S. James Giamarino, Ørsted’s Chief Commercial Officer for the Americas, emphasized the opportunity this financing arrangement represents for expanding the U.S. renewable energy sector, promoting job creation, and fostering local economic development.

Overall, this financing underlines the growing trend of large-scale financial institutions like J.P. Morgan investing in renewable energy and showcases the enabling role of legislative frameworks like the IRA in facilitating such investments. As the U.S. continues prioritizing green energy, such collaborative efforts between the public and private sectors are crucial for achieving energy transition and sustainable development goals.