Matrix Renewables explains balance of contracted & merchant US project plans

Independent power producer Matrix Renewables, backed by TPG and its global investing platform TPG Rise, is working on a project finance transaction to fund its Stillhouse Solar project in Texas that has qualified for an extra 10% ITC bonus, said Philipp Rusch, vice president for finance in the US at Matrix in an interview with NPM.

The 10% domestic content adder will optimize the capital structure for the 284 MW dc / 210 MW ac Stillhouse project in Bell County, Texas, which recently signed a 15-year power purchase agreement (PPA) with affiliates of the Hyundai Motor Group. Hyundai will purchase the electricity output of 147 MW ac of capacity, to power some of its manufacturing plants in the US.

Long-term PPAs with creditworthy counterparty that provide strong contracted cash flow are preferred by lenders, but there can be value from the equity side in selling power when it is convenient, on the spot market.

“To draw an equilibrium, Matrix is working on a hybrid approach for its projects under development, whereby around 40% or 50% of the output could remain uncontracted,” said Rusch. “That could also serve as inflation hedge, considering that power prices tend to move in line with inflation fluctuations,” he added.

The Stillhouse solar project follows the 200 MW ac Pleasant Valley Solar in Idaho, which reached financial close in February and it is now under construction, in partnership with rPlus Energies, who are minority equity holders.

Matrix acquired the Stillhouse project from OCI Solar Power last year, in a much earlier stage of development than Pleasant Valley Solar was when it was bought from rPlus.

“As a goal, Matrix aims to develop its projects in-house from the beginning and retain ownership as IPP. Matrix also targets more control over deciding on counterparty relationships, technology to be employed, EPC contracts, and quality standards in general,” Rusch said.

The company is working on a 6 GW portfolio of solar capacity under mid-stage development, in different territories and jurisdictions across the country, securing permitting, land control and interconnection in process, with NTP expected in 24-to-36 months.

Moreover, the company is assessing its strategy around BESS, as pairing it with solar assets and as standalone, taking into account that development timings for adding a battery to a solar project are shorter than development of a greenfield standalone storage project, Rusch pointed out.

The Gaskell West 2 and 3 solar projects, acquired from Recurrent Energy in 2022, are already operational and complete Matrix’s portfolio. The projects include 143 MW dc of solar energy plus an 80 MWh energy storage system.

Matrix, which has accumulated experience as a solar power developer, was created with the ambition of being a player in the energy transition space. Matrix is also open to different technologies, like wind and hydrogen, Rusch said.

The company has the support of its headquarters in Madrid to fund its immediate development needs in the US. In early May, Matrix announced that it had secured a EUR 300m, five-year corporate debt facility with Santander.

“The global agreement with Santander is seen as key to our near-future strategy,” said Rusch. “The credit agreement with Santander includes an accordion feature, that, if necessary, would allow Matrix to tap into further resources under those terms,” he added.

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

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