Longroad Energy, a renewables platform backed by the New Zealand Superannuation Fund and Infratil, has sold 100 percent of the 250MW Phoebe solar farm in Texas to Canadian investor Innergex Renewable Energy for $105 million.
The Phoebe development, located in Winkley County, will be the largest solar scheme in Texas once completed in mid-2019 and is projected to generate 738GWh of electricity annually. The project has secured a 12-year power-purchase agreement with Shell Energy North America for 89 percent of the electricity generated, with the remainder to be sold into the merchant market.
Longroad Energy arranged $292 million of construction and term project financing from several banks to finance the construction of Phoebe, alongside the $105 million equity investment from Innergex. It oversaw the project’s development and will continue to manage the construction process.
The firm’s development pipeline is “very active”, a company source told Infrastructure Investor.
“Phoebe is a good example of the kind of long-term PPAs that can be signed in the US market and that are becoming more common.”
Comparing the US market with Australia and New Zealand, the source said the US is “probably two to three years ahead” of those markets regarding PPAs, and investors are likely to see increased activity on PPAs in the coming years as the market continues to develop.
As well as the sale of Phoebe, Longroad confirmed it had received full notice to proceed with the construction of the 238MW Rio Bravo wind farm, also in Texas. Approximately 80 percent of Rio Bravo’s energy has been sold to Citigroup Energy via a PPA.
The $300 million construction cost was funded via $200 million from a consortium of lenders and a $100m equity commitment from Longroad. Construction is already under way and commercial operation is targeted to begin in June 2019.
The two Texas renewable projects together will deliver more than 1,500GWh of electricity per year, reducing annual CO2 emissions by approximately 1.3 million tonnes relative to coal-fired generation.
Founded in 2016 to provide access to the US renewables market, the company is owned by NZ Super, infrastructure investor Infratil, and Longroad’s management team. As at 31 March, it owned 684MW of operating assets and 552MW of generating assets for third parties.
In a statement, Infratil said its net funding contribution to Longroad stood at NZ$37.9 million ($25.3 million; €21.6 million) at 31 March. With the commencement of construction on the Rio Bravo windfarm, Infratil had provided a further NZ$71.1 million in the current financial year.
Following the sale of Phoebe and other earnings, Longroad will distribute approximately $30 million each to Infratil and NZ Super in the current financial quarter, Infratil said.
Longroad’s investments are managed by New Zealand-based Morrison & Co, which recently took over management of the Utilities Trust of Australia fund following the demise of Hastings Funds Management’s Australian business.