Macquarie Asset Management (MAM)-backed renewables platform Treaty Oak Clean Energy is planning to raise approximately USD 1bn in debt in 2025, said Chris Elrod, chief executive officer at Treaty Oak in an interview with NPM.

The total USD 1bn will be raised via different transactions and structures throughout the year, some will be project-level debt packages and others corporate credit facilities, he added.

The financing needs for Treaty Oak include those of Galehead Development, an upstream development platform that plans, manages and delivers renewable generation resources and energy transition infrastructure, which now is undergoing an integration process with Treaty Oak.

In late February, MAM acquired the remaining equity in Galehead that it did not already own, establishing that Galehead now becomes a wholly owned subsidiary of Treaty Oak.

Elrod shared with NPM details on Treaty Oak’s development strategy and philosophy, about the following steps in the merger process, and how both companies complement each other under MAM’s ownership.

“Macquarie always had the vision of having under its umbrella a platform that could undertake front-end activities and back-end activities,” Elrod pointed out. “Then the integration of Galehead, with its focus on greenfield project origination and Treaty Oak, that had skills more akin to an IPP, made sense,” he added.

2025 Financing plans

Treaty Oak, which has about 9 GW within its own pipeline, split into roughly 70% PV and 30% standalone battery energy storage system (BESS) projects, is working to convert around 700 MW of nameplate capacity this year to FNTP (Full Notice to Proceed).

“We are planning to start engaging the project finance market with the first set of those projects in the next several weeks, when we will start our pre-marketing activities,” Elrod mentioned.

Included in this 700 MW batch is the 200 MW Hollis Creek PV project in Sabine Parish, Louisiana, scheduled to start commercial operations later this year, according to NPM data.

The sponsor will be seeking non-recourse debt financing for this project, in a structure that is likely to showcase similar features as the financing closed for the 100 MW Redfield Solar project in Grant County, Arkansas, earlier this year.

Three coordinating lead arrangers provided a construction to term loan, a tax credit transfer bridge loan and letters of credit in the Redfield transaction, as announced.

Meanwhile, at the corporate level, Treaty Oak is anticipating wrapping up in 2Q25 a corporate facility, which will be used to help prosecuting its interconnects, making equipment deposits and de-risk the portfolio.

The third source of capital for Treaty Oak is the equity contributions from MAM, which has supported the capital-intensive development activity.

According to Elrod, MAM funds that own Treaty Oak are open ended, which align with the needs of an IPP. At the equity level, Macquarie’s team is very focused on finding ways to bring in some co-investors or other types of LPs that would have either an interest at the project level or at the Treaty Oak level. For projects that reach NTP, Treaty Oak intends to sell down a non-controlling stake to recycle capital.

Separately, Treaty Oak’s team is supporting the process of raising a separate corporate facility for Galehead, which is expected to close soon.

As March starts, Elrod’s team is undertaking the analysis of Galehead’s pipeline of over 20 GWac.

“The outcome of the analysis of Galehead’s pipeline will be decisions about how to continue with those projects,” said Elrod.

“We will take a very opportunistic approach. We certainly will not be able to build everything, therefore we will have to develop and sell, develop and partner, or exit projects abandoning them altogether. But we think that is a very small portion of the portfolio. We think it mainly will be to develop to build or develop to sell,” he added.

Finding synergies with market-fundamentals-first vision

Treaty Oak has been deliberate in the way it prioritized and focused efforts and capital when developing of its roughly 9 GW of clean energy capacity. Its PV projects are in the Southeast, including Georgia and South Carolina, as well as in the MISO south region, in States like Louisiana and Arkansas. Around the Houston area in Texas within ERCOT, the company has found favorable conditions to develop standalone storage projects.

“Our development strategy has always been very intentional,” Elrod pointed out.

He described that Treaty Oak focuses on what he calls a market-fundamentals-first approach.

The team, like location scouts, work to find geographies and markets where they can obtain a better price per electron, for a sustained amount of time -40 years on the solar side; 20 years on the battery side.

Elrod explains that this strategy leads to Treaty Oak avoiding doing solar in places like CAISO, where a massive oversupply of solar electrons, by both behind-the-meter and residential solar and grid-connected solar, lead them to forecast that the solar electron will be worth relatively little going forward, unless there is a steep functional change in the market dynamics to support solar power prices.

Instead, the company prioritize markets like the Southeast, where for decades they have been effectively supplied by nuclear and fossil fuels-based generation, and where entry-barriers for renewables are high, which in turn secure a high price for solar electron for companies that are able to develop high-quality projects.

“We develop a project with the intent to build it. Thus, all the projects in our pipeline are very high-quality, with a high likelihood of converting to FNTP. We will probably convert 700 MWs of nameplate capacity this year to FNTP, spread out fairly equally between photovoltaic and standalone BESS. Overtime, the target for Treaty Oak is to get to a run-rate where we are deploying more than 1 GW of nameplate capacity annually,” he said.

In the meantime, Galehead’s pipeline of over 20 GW spans over 20 States, across multiple balancing authorities, ISOs and RTOs.

“Galehead has projects in places like non-CAISO WECC, like the Pacific Northwest, and in Illinois and Mississippi that are part of MISO, where Treaty Oak was not developing projects and would like to. All of this is very synergistic,” Elrod added.

A similar long-term approach guides Treaty Oak’s decisions on offtake contracts.

“We think that there is good value in long-term off-take contracts for PV in the markets we are active,” Elrod said, “ adding that “for the next 12 to 24 months, the PV projects that we are financing and advancing development in MISO are probably going to follow a similar structure as we did for Redfield, which was backed by a 15-year PPA with an investment grade offtaker.”

On the other hand, the strategy changes for Treaty Oak’s BESS projects in ERCOT.

“We believe that our BESS projects in ERCOT would benefit of the volatility, so we are considering taking more merchant exposure,” Elrod mentioned.

The analysis about project location includes deep research on the ground before signing site control contracts. The team studies topography, access to grid, and ability to operate efficiently, in an effort to gain an accurate notion about the site’s constraints.

Elrod said they are also excited about some standalone batteries that Treaty Oak is developing in Georgia, in the Atlanta metro area. There, the grid and the incumbent stakeholders would quite like to have battery supply available, because it will provide support services in addition to capacity value, he explained.

Asked about how the current uncertainty about potential regulatory changes could impact its development activities, Elrod stressed that his team believed in the value proposition that their projects bring to their customers.

“We believe we are part of the American energy independence movement, and that we have a real seat on the table to help provide the next batch of electrons that are going to serve this phenomenal demand cycle that we are going through,” he said.

“We believe we have a value proposition to our customers, so when we sign our procurement contracts, engaging EPCs, suppliers, and putting orders in place, we are working closely with them to help them navigate all the volatility and uncertainty that may be coming down the pipe as a result of tariffs and everything else. So far, that has been a successful approach.”

Treaty Oak is a clean energy platform focused on developing, commercializing, building and operating utility-scale solar and energy storage projects in targeted US energy markets.

Treaty Oak’s mission is to create a sustainable future by providing clean, low-cost energy solutions to the grid benefitting energy consumers, communities, and generations to come.

MAM initially invested in Galehead in July 2022 to expand its footprint in the US and contribute towards its strategy of owning both development and operating-phase renewable energy assets. MAM’s subsequent investment in Treaty Oak in December 2022 further contributed to MAM’s objectives, and complemented the strategic partnership formed between MAM and Galehead.