Lenders back Recurrent's US projects as solar sector reels from Covid

Recurrent Energy has secured a $75m bank loan to accelerate utility-scale solar PV development activities in North America with a focus on Texas which remains a hot growth spot in the US despite ongoing sector upheaval from Covid-19.

Shawn Qu, CEO of parent Canadian Solar, called the market backdrop “challenging,” but said the transaction reflects Nomura’s “strong confidence” in the quality of Recurrent’s assets and ability to complete projects.

"Nomura is always pleased to develop creative solutions for its clients, particularly those like Recurrent Energy who have talented teams and a compelling business strategy,” said Vinod Mukani, head of Nomura’s Infrastructure and Power Finance group.

The Nomura deal is the third arranged by Recurrent this summer. In July, it announced closing of $282m in debt financing to construct its 327MW Maplewood 1 and 40MW Maplewood 2 solar projects in the oil producing Permian Basin in West Texas.

Maplewood 1’s 15-year, 310MW virtual power purchase agreement (VPPA) with brewer Anheuser-Busch is the seventh largest commercial and industrial (C&I) off-take deal for solar globally, according to Bloomberg New Energy Finance. Maplewood 2 signed a 15-year VPPA with Dallas-based Energy Transfer Partners for its full capacity.

PPAs allow corporate renewable buyers to commit to green energy without taking physical delivery of the electricity and are based on variable-priced cash flow and renewable energy certificates.

Earlier this month, Recurrent raised $234m in debt and tax equity financing for construction of its 144MW Pflugerville project near the Texas capital of Austin that will supply energy over 15 years to municipal utility Austin Energy.

On 31 March, Texas ranked fourth with Florida among US states with 4.6GW of installed solar capacity behind California (27.9GW), North Carolina (6.4GW) and Arizona (4.7GW), according to Solar Energy Industries Association (SEIA), a Washington, DC, national trade group.

Research group Wood Mackenzie estimates Texas will install an additional 13.3GW of solar capacity over the next five years.

More than 511,000 works in the clean energy industry have lost their jobs including 72,000 in solar since the coronavirus outbreak pushed $21 trillion US economy into recession in March.

As the pandemic drags on, various solar developers are having trouble raising tax equity, particularly those with less capital or with perceived or real issues involving off-take creditworthiness. Some projects are getting pushed into 2021 or are on hold.