A solar energy project that will provide power for Microsoft has begun commercial operation in Arizona, with the project developer announcing term financing has been completed.
Longroad Energy, a Boston-based renewable energy developer that also has offices in California and Maine, on July 20 said the 200-MW Sun Streams 2 array—one of four Maricopa County-based projects that Longroad acquired from First Solar in February of this year—is online. The other three projects, known as Sun Streams 3, 4, and 5, are scheduled to enter operation over the next three years.
Sun Streams 2 has a 20-year revenue agreement with Microsoft for the project’s capacity, along with renewable energy certificates, in support of the company’s West US 3 data center. The project includes battery storage; the four-project portfolio totals about 900 MW of solar plus storage.
Microsoft in June announced the launch of a new Azure cloud data center region in Arizona. As with other regions, West US 3 is made up of at least three separate facilities known as “Availability Zones.” The region has Arizona data centers located in Goodyear and El Mirage, and outside Phoenix. Microsoft said it picked the Arizona location for its abundant “solar energy, highly skilled workforce, proximity to our customers, and availability of land.” Arizona also is known for its favorable tax exemptions on data centers.
Capital Structure Finalized
“Sun Streams 2 is a great project, and we are happy to finalize the permanent capital structure,” said Peter Keel, CFO of Longroad Energy. “We are grateful to our lenders CIBC, Silicon Valley Bank, and Helaba. Also, we are pleased to complete our first tax equity transaction with PNC Bank. Longroad values our financial partners and looks forward to many more deals with them in the future.”
Longroad on Tuesday said CIBC was the coordinating lead arranger, collateral agent and issuing bank for the project. Silicon Valley Bank served as coordinating lead arranger and administrative agent, with Helaba participating. PNC Bank was the sole tax equity investor.
“The Sun Streams 2 project is another example of Longroad Energy’s market-leading development capabilities and CIBC’s commitment to the U.S. renewable energy sector,” said Jim King, managing director at CIBC. “We are pleased to co-lead this important financing for Longroad and we thank the team for asking us to support them on this significant transaction.”
Longroad has experience working with major digital companies, including Facebook. The company in 2020 completed the Prospero Solar project in Andrews County, Texas; the solar farm has a nameplate capacity of 379 MW. Facebook is the sole tax equity investor for the project, which represents the company’s first direct investment in a renewable energy project.
$40 Million for Arizona
Longroad has touted the financial benefits of the Sun Streams projects, which are expected to generate more than $40 million for Arizona’s schools via a long-term lease with the Arizona State Land Department. The company also said the projects will generate more than $5 million in tax revenue.
Bret Turner, market manager of project finance at Silicon Valley Bank, said, “We are delighted to support the Longroad Energy team by leading the financing of the Sun Streams 2 solar project. “This innovative project will help companies, such as Microsoft, reach their renewable energy goals.”
PNC has ramped up its support of renewable energy in recent years, particularly for solar projects. Mark Williams, managing director for PNC’s Renewable Energy Finance Group, said, “PNC is pleased to provide Longroad Energy with tax equity financing for the Sun Streams 2 solar generation facility. This project underscores our commitment to supporting customers and communities throughout the U.S. with financing for high-quality renewable assets.”
Expanding Renewable Energy Presence
Longroad is expanding its presence in Arizona, where it owns other operating solar projects in addition to the Sun Streams installations. Longroad Energy Services, a Longroad affiliate, is the asset manager and operator, and is providing remote monitoring services to the project over the long term.
Longroad owns 1.6 GW of operational and under construction wind and solar projects across the U.S. Longroad Energy Services operates and manages 3.6 GW of energy projects, which includes Longroad’s own project in addition to 2 GW of wind and solar projects on behalf of third parties.
First Solar was the original developer of the Sun Streams project, as well as the supplier of the Series 6 modules. The project was built by McCarthy, with trackers supplied by Nextracker. Inverters were supplied by SMA.
—Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).