Arizona’s largest energy storage project closes $513 million in financing

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Recurrent Energy, a subsidiary of Canadian Solar Inc. has secured $513 million in project financing for its Papago Storage project located in Maricopa County, Arizona.

The 1,200 MWh Papago Storage, which will be the largest energy storage project in Arizona, is expected to begin operations in the third quarter of 2024, with commercial operations slated for the second quarter of 2025. Once operational, the project is expected to dispatch enough power for approximately 244,000 homes for four hours every day.

The Papago battery energy storage systems (BESS) project will use e-Storage’s SolBank, a containerized, proprietary battery energy storage solution designed and manufactured for utility-scale applications. SolBank, which was announced at RE+ in Anaheim in 2022, uses high-cycle lithium-ferro-phosphate (LFP) batteries with a 2.8 MWh energy capacity.

Recurrent Energy, owner of the project, secured a 20-year tolling agreement with Arizona Public Service (APS) for the energy storage project, under which the utility pays for the right to charge and discharge the battery when it needs to.

MUFG and Nord/LB acted as coordinating lead arrangers for the Papago Storage project financing. The financing includes a $249 million construction and term loan, a $163 million tax equity bridge loan, and a $101 million letter of credit facility. Joint lead arrangers for the transaction included Bank of America, CoBank, DNB, Rabobank, Siemens Financial Services, and Zions.

“Today, we are thrilled to see nearly a decade of planning culminate in the financing of what will be the largest energy storage project in Arizona,” said Ismael Guerrero, CEO of Recurrent Energy. “We appreciate the continued support from our partners Nord/LB and MUFG in our shared mission to advance the clean energy transition.”

Last April Canadian Solar rebranded its wholly owned global energy subsidiary as Recurrent Energy. This segment develops both stand-alone solar and stand-alone battery storage projects, as well as hybrid solar-plus-storage projects. To date, Recurrent Energy has delivered more than 10 GWp of solar power projects and 3.3 GWh of energy storage projects, with a global project development pipeline of 26 GWp and 56 GWh for solar and energy storage respectively, the company reports. In North America, Recurrent Energy is developing a pipeline of 6.3 GWp of solar projects and 18.9 GWh of battery energy storage projects.

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