Danish company Orsted has announced a significant investment of $680 million in tax equity financing from J.P. Morgan for a portfolio of solar and storage assets in Texas and Arizona. This move underscores Orsted's commitment to expanding its presence in the United States' clean energy sector.
The tax equity financing arrangement enables the transfer of tax credits, facilitated by the 2022 President Biden's Inflation Reduction Act, thereby supporting clean energy storage projects across the nation.
In parallel, the Biden administration is actively engaged in identifying optimal areas for solar energy development in 11 western states, with finalization expected by year-end. This initiative aligns with broader efforts to bolster renewable energy infrastructure across the country.
European panel manufacturers are also exploring opportunities beyond the EU, driven by competitive pressures from China and the U.S., where government support for domestic producers is more pronounced.
Orsted intends to utilize the investment to advance the completion of its Arizona project, alongside its 250 MW solar endeavor in Texas. The company highlights the significance of these projects in contributing to its overall renewable energy portfolio.
Notably, Orsted's 300 MW Arizona facility stands to benefit from a one-time investment tax credit for its battery storage system, reflecting the increasing importance of storage technology in the renewable energy landscape. Meanwhile, the solar farm in Arizona is poised to generate production tax credits over the next decade, further bolstering its economic viability.
Prior to this agreement, J.P. Morgan had investments in 1.8 GW of Orsted's 5.7 GW onshore portfolio in the United States, indicating a continued partnership between the two entities.
Both projects are anticipated to commence commercial operations in 2024, contributing to the ongoing growth of utility-scale solar projects. According to environmental research group Kayrros, the sector witnessed a record addition of 15 gigawatts (GW) of capacity in 2023, marking a substantial increase from previous years.
