Avangrid Inc., a sustainable power firm and member of the Iberdrola Group, and Vitol Inc. have reached a significant switch settlement for an estimated $100 million of 2023 manufacturing tax credit (PTCs) from eight working wind farms, totaling 1,134 MW of producing capability.
The settlement marks one of many largest publicly introduced offers to-date for the reason that passage of the Inflation Discount Act (IRA), and it cements Avangrid as an early mover in single 12 months as-generated credit score transfers.
“The Inflation Discount Act affords an unprecedented steady framework, enhancing the attractiveness of renewables,” says Pedro Azagra, Avangrid CEO. “It has created a tax credit score switch course of that’s streamlined and removes the bottleneck that existed with the tax fairness funding construction.
“We anticipate this transaction to function a reference level on this quickly increasing market. The switch ensures that we obtain better worth from our renewable power tasks, and it’ll permit us to pay down debt and make additional capital investments to profit our prospects.”
The IRA created a brand new transferable credit score framework to assist builders monetize PTCs. Below the IRA, renewable power house owners like Avangrid who qualify for tax credit however should not in a position to make use of them instantly can switch credit to a third-party investor, reminiscent of Vitol. Previous to the IRA, this was solely attainable by way of a tax fairness partnership, which requires a prolonged diligence and negotiation course of in addition to vital transaction prices.
“We’re delighted to companion with Avangrid by way of this tax credit score funding, a part of Vitol’s broader strategic funding in renewable assets and the power transition,” says Rick Evans, CFO of Vitol Inc. “This new tax credit score switch mechanism guarantees to unlock vital swimming pools of recent capital to assist funding in renewable assets.”
The 2023 PTCs included within the switch settlement with Vitol are from eight of Avangrid’s wind farms: Baffin Bay, Deerfield, Desert Wind, Klondike II, La Joya, Tule, Trimont and Twin Buttes II.
The third largest wind operator in america, Avangrid expects to proceed energetic participation in PTC transfers and can proceed to push on the edges of this growing market.
