Enel Green Power North America, the Enel Group’s US renewable energy company, acting through its unit Red Dirt Wind Holdings, has signed a tax equity agreement worth about $340 million with MUFG and Allianz Renewable Energy Partners of America for the Red Dirt wind project located in Oklahoma, which has a total installed capacity of around 300 MW.
Under the agreement, which is common for the development of renewable energy projects in the United States, MUFG and Allianz will pay the above amount to the wind farm owner, Red Dirt Holdings, purchasing 100 percent of Class B equity interests in the project.
This interest will allow the two investors to obtain, under certain conditions set by U.S. tax laws, a percentage of the fiscal benefits of the Red Dirt wind project. In turn, EGPNA, through Red Dirt Holdings, will retain 100 percent ownership of the Class A interests and therefore management control of the project.
The agreement secures the funding commitment by the two investors, while the closing of the funding is expected upon start of commercial operation of the Red Dirt wind farm. The tax equity partnership will be supported by a parent company guarantee from Enel.
The Red Dirt wind power project, whose construction started in April, is expected to begin operations by the end of 2017. The investment in Red Dirt amounts to nearly $420 million, which is part of the investment outlined in Enel’s current strategic plan.
Once fully up and running, Red Dirt will be able to generate nearly 1,200 GWh of renewable energy annually, which is equivalent to the energy consumption needs of more than 97,000 U.S. households, while avoiding the emission of about 860,000 tonnes of carbon dioxide each year.
The energy and renewable energy credits generated from Red Dirt will be sold under two long-term agreements, with T-Mobile USA, Inc. for 160 MW and with the Grand River Dam Authority for 140 MW of the wind facility.