Closings demonstrate thesis that today’s long term offtake contracts destroy value and that innovative financing can enable more valuable offtake structures
San Francisco — [November 18, 2021] — Intersect Power, LLC, (“Intersect Power” or “Intersect”), announced today the closing of eight separate transactions representing an aggregate of $2.6B of financing commitments for the construction and operations of a six-project portfolio. The transactions cover construction financing, tax equity, land financing and portfolio level term debt with industry-leading partners.
“These closings demonstrate what Intersect has been saying for some time now – that today’s long-term offtake contracts actually destroy value, and that there are innovative ways to finance clean energy assets which enable more valuable offtake structures,” said Sheldon Kimber, founder and CEO of Intersect. “This financing will allow Intersect to deliver a core set of projects in the next two years that will serve as the platform for future growth into green hydrogen and beyond. This is the base from which our company will build the most scalable, transformative clean energy projects that minimize cost and risk per MW deployed, and move the needle on the deep decarbonization of our economy.”
Intersect’s differentiated approach to power marketing and financing, focused on the active management of shorter-tenor offtake contracts and portfolio-level financing, is expected to deliver superior risk-adjusted returns for investors. The closings will allow Intersect Power to execute its portfolio of 2.2 GWDC of late-stage solar projects with 1.4 GWh of storage that will be in operation by 2023 (the “Portfolio”), which includes the following projects: Athos III (CA), Radian (TX), Oberon I (CA), Oberon II (CA), Lumina I (TX) and Lumina II (TX).
What distinguishes these financings from typical renewable projects is the $1.4B of portfolio level, term debt funding provided by HPS Investment Partners and Co-Investors, along with existing Intersect investors CarVal Investors, Generate and Climate Adaptive Infrastructure. Bank of America and Morgan Stanley & Co. LLC served as co-lead arrangers and structuring agents on the term debt placement. The term financing facility incorporates structuring and pricing provisions designed to account for the higher proportion of uncontracted revenue in the portfolio. Proceeds from the term facility will support both construction and operation of the Portfolio.
Michael Patterson, Governing Partner of HPS, said, “Intersect Power is a market leader in developing clean energy infrastructure at the scale needed to move the needle on the incredibly important transition to a sustainable future. We are thrilled to partner with Sheldon and his talented team and bring our renewable energy expertise and capital to bear to help accelerate Intersect’s growth trajectory across established and emerging areas of renewable power generation and infrastructure. The innovative financial solutions that Intersect will be able to implement thanks to this landmark transaction will play a key role in solidifying its position at the forefront of the industry and we look forward to continuing to support the Company as it builds on its strong track record of success.”
“We are proud to partner with Intersect on this innovative financing structure that we hope will serve as a platform for future growth in sustainable financing projects,” said Jerry Keefe, Principal at CarVal Investors. “We believe Intersect has strong expertise in clean energy and we look forward to supporting them in their commitment to making a global impact on sustainable finance.”
“The Intersect team is changing the way infrastructure gets deployed at the scale we need to meet the climate challenge,” said Jeff Ross, senior managing director and head of the investment team at Generate Capital. “ Generate is proud to collaborate with the visionary team at Intersect again to support their growth.”
“Bank of America is committed to delivering creative and holistic solutions to the renewable energy sector. We are pleased to support the Intersect Power team with its complementary financing objectives—spanning term debt placement, tax equity raise and power hedging—and look forward to collaboration on future opportunities,” said Omer Farooq, Managing Director and Global Head of Asset Finance in Bank of America’s Global Sustainable Finance Group.
The approximately $800 million construction financing proceeds will be used to fund the construction of Intersect’s 310MWdc + 453MWh BESS Athos III Project located in Riverside County, California and 415MWdc Radian Project located in Brown County, Texas. The five lender financing was led by Co-Coordinating Lead Arrangers, MUFG and Santander Bank, N.A. The group also included KeyBanc Capital Markets, CoBank, and Helaba as Joint Lead Arrangers. The Athos III and Radian projects are under construction and will come online in late 2022.
“Santander is proud to have helped Intersect Power put together these impressive and innovative transactions that allow us to combine our vast experience in complex renewable energy structuring with our growing fund finance practice,” said Nuno Andrade, US Head of Structured Finance of Santander Corporate & Investment Banking. “We congratulate all the parties involved, especially the entire Intersect team for this amazing achievement.”
Alex Wernberg, Head of Power Project financing at MUFG noted, “Santander and MUFG as CLAs, were pleased to work with Intersect and HPS to engineer a bespoke structure to accommodate the unique portfolio level term debt take-out financing.“
Concurrent with the closing of the construction financing, Intersect secured approximately $400 million of commitments from leading tax equity investors, including Bank of America (Radian) and Morgan Stanley Renewables Inc. (Athos III). Intersect also executed an innovative offtake structure with Merrill Lynch Commodities to hedge the Radian project.
“We are pleased to partner with Sheldon and the Intersect Power team, and continue our contribution to the decarbonization of the US energy market,” said Jorge Iragorri, Managing Director and Head of Alternative Financing Group at Morgan Stanley.
“As a founding investor in Intersect Power, we are proud of our ongoing support for the company as it redefines the future of renewable infrastructure,” said Bill Green, Founder and Managing Partner at Climate Adaptive Infrastructure. “Intersect Power has delivered on the substantial goals it set out last fall and has proven its core thesis around the evolution of power markets and financing. As demand for clean energy and policy support further strengthens, we are confident in Intersect Power’s future growth opportunities and will continue to invest in Intersect, and other innovators across the clean energy industry.”
Intersect and its partners were represented by the following counsel and advisors on the deals: Orrick Herrington & Sutcliffe represented IP as lead counsel on all transactions and Kirkland & Ellis LLP served as Intersect’s special tax counsel; CCA Group, LLC advised IP on the tax equity transactions; Kirkland & Ellis LLP served as counsel to the CarVal Investors, Generate and Climate Adaptive Infrastructure; Hunton Andrews Kurth LLP served as counsel to Bank of America Tax Equity; Mayer Brown LLP served as counsel to Morgan Stanley Renewables Inc.; Skadden, Arps, Slate, Meagher & Flom LLP served as counsel to HPS; and Winston & Strawn LLP served as counsel to the construction lenders.
ABOUT INTERSECT POWER
Founded in 2016, Intersect Power is a clean energy company bringing innovative and scalable low-carbon solutions to its customers in retail and wholesale energy markets. The company develops some of the world’s largest clean energy resources providing low-carbon electricity, fuels, and related products to customers across North America. Intersect Power has a portfolio of 2.4 GWDC of late-stage solar projects and 1.8 GWh storage projects, an emerging pipeline of 8.5 GWp+ of renewable generation, 8 GWh+ of energy storage, 600 MW+ of green hydrogen production and approximately $4B in financial transactions closed.