SB Energy execs discuss how latest project portfolio qualified for domestic content and energy community adders
SB Energy started to rethink how it was building its portfolio of projects almost the moment after the Inflation Reduction Act passed in August 2022, according to Co-CEO Rich Hossfeld in an interview with NPM.
As reported, the developer raised USD 2.4bn in financing to support the construction of a 1.3 GW portfolio of four utility-scale solar projects in Texas in late 2023. Three of the projects are also the first utility-scale projects in the US to reach financial close with the domestic content adder.
Even without formal guidance being passed, SB Energy set about trying to source parts to meet the domestic content adder.
“We made certain assumptions and took a conservative approach to qualify, ensuring each project had domestic content beyond what was required in the guidance,” said Hossfeld.
Three of the projects—Orion I, II and III would qualify for a 50% ITC tax—when incorporating the base rate, domestic adder and energy community adder, while the fourth Eiffel would qualify for a 40% ITC.
In order to finance the projects with the domestic content adders, SB Energy sourced steel from manufacturers in Texas and Georgia and sourced both of its panels and solar trackers out of its existing relationships with domestic-based supplier First Solar and Nextracker, respectively.
First Solar, for example, has moved further up the supply chain into additional domestic components since the IRA. All of the solar modules for these projects are from First Solar’s Ohio plant.
Lining up the financing and tax equity to support this had multiple moving parts, as each of the four projects had a single tax equity provider, while the USD 1.2bn in construction debt was spread amongst seven institutions:
Orion 2 - COD in 2024, tax equity provided by Morgan Stanley
“2023 was the year we developed a blueprint to deploy projects with the domestic content and energy community adders. In 2024, we will advance how transfers work for these credits as there is a growing demand in the marketplace,” said Gianluca Signorelli, SB’s head of capital markets.
The next steps for domestic content come in 1Q24 when the Department of Energy and the IRS is expected to issue a formal notice of proposed rulemaking (NOPR).
As for the next steps in its platform, Hossfeld said SB Energy is focused on CAISO, WECC and MISO, but did not give any specifics as of yet on individual projects.
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