Doral Renewables CFO walks through USD 1.1bn capital raise on late-stage projects and long-term pipeline

Doral Renewables was looking at the big picture when it went looking for its next round of capital.

The company was looking to accelerate its pipeline in regions such as SERC, MISO and SPP, but at the same time it already has multiple projects forecasted to reach commercial operations over the next two years, including the 1.3 GW Mammoth Solar project in Indiana.

Doral worked with Guggenheim and Bank of America to not only raise corporate capital, but also raise additional tax equity to support its late-stage projects. The end result was that funds managed by Apollo combined with one of its existing shareholders Migdal on a USD 500m convertible note, while Bank of America arranged for USD 600m of tax equity and an LC facility.

“If we had utilized a traditional auction process, it would not have resulted in us efficiently obtaining the benefit of tax equity and LC coverage as part of the overall transaction,” said Evan Speece, CFO of Doral in an interview with NPM, adding that “as a strategic benefit, having Apollo as an anchor investor is and will be a strong valuation of the platform which we hope will benefit our future capital formation as well.”

In the near-term, though, Doral is readying to get its first MWs to commercial operations and is forecasting much more then that over the next 24 months. BAML already announced it is providing USD 175m in tax equity to support the first project out of the gate, the 400 MW first phase of the Mammoth Solar project in Indiana, but now also announced its willingness to work with Doral to invest up to an additional USD 475m of tax equity in other Doral projects.

“The additional capacity is not required to be used for certain projects, but we have enough projects in late stages to utilize all of that capacity,” said Speece.

Speece said about 30% of Mammoth North’s construction is complete and expects it to go COD in 4Q23. The second 300 MW phase, Mammoth South is slated for NTP in 1H23 and the 600 MW Mammoth Central is behind that. All phases of Mammoth Solar have been contracted with investment-grade offtakers.

There are also projects progressing in Georgia and Pennsylvania. In Georgia, Doral acquired the 150 MWac Brenneman Solar project in Macon County, Georgia in December 2021. It is still working to contract the offtake for the project.

Southern Comfort

Doral is excited about its prospects in Georgia and other states in the Southeastern Reliability Council (SERC) as it believes the fundamentals for developing projects are strong in certain areas of the states.

“Though there is not a capacity markets like other ISOs in which we operate, there is strong demand growth, offtake interest and the potential for long-term PPAs,” said Speece adding that “projects in those areas also tend to have higher relative irradiance which helps to provide strong margins if the rest of the project economics fit.”

Speece also said that Doral focuses on SERC projects that already have executed interconnection agreements (whether active or in suspension) in order to reduce the risk of impacts from interconnection queue delays.

SERC though is one of the many markets Doral is chasing through its 8 GW pipeline which also includes solar and solar + storage projects in PJM, MISO, ERCOT, NYISO, SPP and NE-ISO.

Capital markets transaction

This year saw three renewable developers file for IPOs, but none have advanced yet amidst a sharp downturn in the equity markets. DE Shaw Renewable Investments (DESRI) and Rev Renewables filed in January, while MN8 Energy —formerly Goldman Sachs Renewable Partners— filed an S-1 prospectus in September after formally announcing a spinoff from the global investment banking giant.

Apollo who is a majority investor in the Doral convertible notes, will have the option to convert to equity even before an IPO or in conjunction with a Doral IPO.

Speece was not willing to divulge if Doral has a timeframe for going public, nor if it has any internal target for operational renewable capacity before it will do so. However, he does think the market is ripe for more renewable energy public offerings in the long term, particularly as such equities are in short supply when looking at the markets holistically. Speece himself had a seven-year stint at Clearway Energy, including as Vice-President and Head of Capital Markets before joining Doral in September 2021.

“I believe there will be space in the future for renewable “IPP 2.0” companies to access public markets which are presently under-supplied and underpenetrated in the space and I think that several companies will look to do so when the markets turn,” said Speece, adding “it will be important to public investors for such companies to tell a story of the strength of their operating assets, but also how their future development pipeline will convert into shareholder value.”

*This story was originally published exclusively for NPM subscribers last month.


New Project Media (NPM) is a leading data, intelligence and events company dedicated to providing origination led coverage of the renewable energy market for the development, finance, advisory & corporate community.