Iberdrola and CIP in historic $1.2bn Vineyard Wind tax equity deal with leading US banks
Largest such transaction in offshore wind with Bank of America, JP Morgan Chase, and Wells Fargo a vote of confidence for struggling sector
Copenhagen Infrastructure Partners (CIP) and Iberdrola’s Avangrid announced the first US offshore wind tax equity financing deal valued at $1.2bn for the joint venture (JV) partners’ 800MW Vineyard Wind 1 project.
Bank of America (BoA), JP Morgan Chase, and Wells Fargo provided the tax equity.
“Finalising this tax equity transaction is a critical milestone in executing the financing plan for Vineyard Wind 1,” said Pedro Azagra, Avangrid CEO.
Tim Evans, head of North America for CIP, said: “Closing on a tax equity package has always been a central element to achieving financial success for the first-of-its-kind Vineyard Wind 1.”
BoA and JP Morgan Chase comprise roughly half of the $19bn US tax equity finance market.
The estimated $4bn project is qualified for at least 30% investment tax credit (ITC) for capital investment under the landmark Inflation Reduction Act (IRA), a one-time payment after the project is placed in service.
With 10% adders each for meeting domestic content thresholds and for locating facilities in fossil-fuel powered communities or on brownfield sites, projects can receive total ITC of 50%. Many early-stage projects are struggling to qualify for the adders due to an immature domestic supply chain and lack of energy community access.
Vineyard Wind 1 is the US’ first commercial scale array to be fully permitted and head into offshore installation.
“We are thrilled to see the Vineyard Wind 1 project finalise this historic tax equity transaction,” said Gregory Wetstone, CEO of industry lobbyist American Council on Renewable Energy.
“Cost-effective offshore wind energy development is essential to meet US climate goals, and this deal brings us one step closer to that achievement.”
John Begala, vice president of supply chain development at sector advocate Business Network for Offshore Wind said: “The IRA is helping to create a strong market, with today's announcement coming on the heels of a billion-dollar high-tech manufacturing investment in the state of New York to produce blades and nacelles for the US market.”