Longroad just completed financing and sale of the 294-MW Muscle Shoals solar project to Ørsted

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Longroad Energy, a U.S.-based renewable energy developer, owner and operator, just completed financing and sale of the 294-MW Muscle Shoals solar project to Ørsted. Ørsted now has a total of 647 MWac of solar generation under construction in the U.S.

The Muscle Shoals solar farm, the largest renewable energy project in Alabama, is expected to come online mid 2021. This project and a few others has Alabama rocketing up the state rankings in 2020 (from its 49th placing in 2019).

The project has a 20-year power purchase agreement with the Tennessee Valley Authority.

Longroad Energy will manage the construction of this project in the rapidly growing Southeast solar market.

A big project for TVA

Longroad Energy CEO and cofounder Paul Gaynor spoke to pv magazine about the Muscle Shoals project, big utility projects and the tax equity environment in 2020 and its impact on developers.

Gaynor notes, “We have a pretty strong influence on panel selection, trackers and inverters — the big three.” The rest of the stuff is left to the EPC.

One of the more notable characteristics of the Muscle Shoals project, Gaynor notes, is the counterparty on this “high-profile” 20-year contract — TVA. “They themselves are going through a transition and getting more renewables online,” he said, adding, TVA has done a “good job of opening the door to renewable development.”

Although TVA has had a mixed record with solar policies, TVA’s data center customers such as Google are moving towards 100% renewable energy — and are pulling their utilities along with them.

Big projects

Utility-scale solar and big solar projects have allowed U.S. solar to have a growth year in 2020, despite sluggish residential and commercial markets. The U.S. has a ~40 GW pipeline of utility-scale solar.

Longroad developed and co-owns with AIP the massive Prospero I, a 379-MW solar farm under construction in Andrews County, Texas. The project is comprised of nearly 3.2 million PV panels and just became operational.

The CEO of Longroad said “It’s all about the economics of scale. If you have the property and interconnection capacity, adding 25 MW or 50 MW can make a meaningful difference.”

Long Road already owns more than a gigawatt of wind and solar assets and Gaynor notes, “Our business model is relatively flexible. There are some assets that we’ve developed that we’ve retained ownership — it’s a function of what’s happening in the market.”

Tax equity

What keeps the CEO of a  large-scale solar project developer up at night? It’s the tax equity climate.

“From someone in my seat, it is the single largest risk around projects actually done. It’s a real issue. Demand is way in excess of supply.”

He adds, “You have to have tax equity — we can never win a project and be competitive without it. The biggest issue with getting a deal completed is a reliable tax equity partner.”

And he notes, “There is definitely not an oversupply of tax equity.”

Muscle Shoals, Alabama (map from Ørsted)

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