US Solar Fund has announced it has closed the acquisition and financing of 100% of the cash equity interests in the 128MW Milford Solar Project. Construction is expected to begin immediately with full commercial operations expected before the end of 2020. The Company first announced the acquisition on 23 July 2019, however detailed disclosure was subject to financial close.
Located in Beaver County, Utah
The Project is in Beaver County, approximately six miles north of Milford, Utah. Milford is expected to be operational in late 2020 and, will sell 100% of the power and renewable energy credits generated at a fixed price for 25 years to PacifiCorp (S&P rating: A), a wholly owned subsidiary of Berkshire Hathaway Energy. PacifiCorp has contracted to sell all the renewable attributes associated with the Project to a retail customer. PacifiCorp is a US electric power company that primarily operates regulated utilities with a service territory across the US states of Oregon, Washington, California, Utah, Idaho and Wyoming.
Acquired from Longroad Energy Partners
USF will acquire Milford from developer Longroad Energy Partners, LLC.. The Longroad team has developed and financed more than 5GW of utility-scale renewable energy projects since 2004, including over 1GW in the state of Utah. The Project will be constructed on a fixed-time and fixed-cost basis by McCarthy Building Companies, one of the largest construction companies in the US with over 2.8GW of solar and energy storage projects designed, constructed or completed since 2013. The Project will use First Solar Inc.'s Series 6 solar panels and First Solar Energy Services is expected to provide operations and maintenance services under a separate long-term contract.
Once operational, the Project will generate over 277,500 megawatt hours of electricity annually. This volume of electricity is equivalent to displacing approximately 235,000 tonnes of CO2 emissions, powering 31,000 homes, or removing 51,000 cars from the road, every year.
Funding arrangements
The Company will fund the acquisition and construction of Milford with initial equity of approximately US$30m alongside non-recourse construction debt provided by Zions Bancorporation N.A. and KeyBank N.A. as Joint Lead Arrangers. Once complete, approximately $50m of the construction debt will convert to non-recourse senior debt provided by the same lender group. Wells Fargo, an established and consistent leader in renewable energy and cleantech financing since 2006, has committed to provide tax equity funding for Milford upon achievement of construction milestones. The expected returns from the Project are in line with those anticipated in the Company's investment objective, as set out in its prospectus dated 26 February 2019. USF continues to due diligence opportunities from its pipeline and expects to announce further investments in due course.
Comments from Gillian Nott, Chairman of US Solar Fund
"We are delighted to have reached financial close on our first high-quality solar asset. The 25-year PPA with PacifiCorp will provide stable long-term infrastructure cashflows to our investors, something that is particularly pleasing in this low interest rate environment. The Board looks forward to the Investment Manager's continued pace in deploying our IPO proceeds."
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