Capital Dynamics, Tenaska join booming Midwest solar market

Capital Dynamics has been moving quickly in U.S. solar. The company caught a lot of attention with its acquisition of solar yieldco 8point3 Energy Partners and its 946 MW-AC of solar projects in June, but this is only a minor portion of the 3.1 GW of solar assets it held at the beginning of November.

The asset manager has now expanded its partnership with Nebraska-based developer Tenaska to build what may be the largest single portfolio of solar plants in the Midwest announced to date. On Monday the two companies inked a deal to develop 14 solar projects totaling 2 GWac in six Midwestern states, all of which are part of the Midcontinent Independent System Operator (MISO) grid.

Through the deal Tenaska plans to pair its development skills with Capital Dynamic’s ability to raise money and structure deals for projects.

Boom in the Midwest

MISO has been a big market for renewable energy, but until recently this has almost exclusively meant wind. In fact, the 2 GW of solar that the two companies plan to build is more than the entire 1.6 GW of solar capacity currently online in the six states (Michigan, Missouri, Illinois, Wisconsin, Indiana and Minnesota) in which they are planned.

And while the companies state that this represents a large share of all solar projects in MISO’s northern region, MISO reports that as of November 1 the total capacity of solar projects in its interconnection queue had boomed to 35 GW – with roughly 2/3 of those in the northern region. 

It is not clear what is driving this increased development activity, the large majority of which has been in the last two years. One factor may be the reform and expansion of the market for renewable energy credits in Illinois through the Future Energy Jobs Act. 

Another may be wind itself. Wind generated 8% of MISO’s energy in 2016 and 2017, and this is concentrated in the northern portion of the grid. This means that while hours of high wind may depress wholesale prices – particularly overnight – there is still ample opportunity for generation to meet mid-day electricity demand.

Capital Dynamics has alluded to the opportunity that the region represents. “This agreement was a unique opportunity for us to acquire a meaningful pipeline of solar capacity in an efficient project development structure within a market poised for growth,” said Benoit Allehaut, director of Capital Dynamics’ Clean Energy Infrastructure team.