Copenhagen Infrastructure Partners (CIP) and Avangrid, Inc. (NYSE: AGR) have jointly announced a significant milestone for the Vineyard Wind 1 project, the first commercial-scale offshore wind project in the United States. This project, aimed at advancing green energy production, recently secured a pioneering tax equity package worth $1.2 billion in investment from three major US-based banks, namely J.P. Morgan Chase, Bank of America, and Wells Fargo. This transaction represents the largest single asset tax equity financing ever achieved and is the first of its kind for a commercial-scale offshore wind endeavor.
The Vineyard Wind 1 project, which is located 15 miles off the coast of Martha's Vineyard, began on-site construction in late 2021 and achieved the significant milestone of steel-in-the-water in June 2023. It also completed the nation's inaugural offshore substation in July 2023. Notably, the project has signed the first Project Labor Agreement for an offshore wind project in the United States, promising the creation of 500 union jobs.
The tax equity package closure is a pivotal step in executing the financing plan for Vineyard Wind 1. Tim Evans, partner and Head of North America for CIP, emphasized its importance by stating, “Closing on a tax equity package has always been a central element to achieving financial success for the first-of-its-kind Vineyard Wind 1. With this investment, Vineyard Wind 1 moves Massachusetts closer to its goal of reducing greenhouse gas emissions by 50% by 2030.”
Avangrid CEO Pedro Azagra expressed enthusiasm for the progress, noting, “We are continuing to make history with this first-in-the-nation project. Finalizing this tax equity transaction is a critical milestone in executing the financing plan for Vineyard Wind 1. It will allow us to continue financing the project to make it operational. We are now one step closer to delivering clean, renewable offshore wind energy to Massachusetts homes and businesses.”
Congressman Bill Keating of Massachusetts's 9th District recognized the significance of this development within the context of the Inflation Reduction Act, stating, “The closing of this transaction marks a critical step for the financing of Vineyard Wind 1, and in turn for our clean energy economy and the union jobs that have been guaranteed through the first-of-its-kind Project Labor Agreement between Vineyard Wind and the Massachusetts Building Trades.”
The Vineyard Wind 1 project, with an 800 MW capacity, is set to generate electricity for over 400,000 homes and businesses in the Commonwealth of Massachusetts through its long-term power purchase agreements with National Grid, Eversource, and Unitil. It is expected to save ratepayers $1.4 billion over the initial 20 years of operation and reduce carbon emissions by more than 1.6 million tons annually.
Financial and legal advisory services for Vineyard Wind 1, CIP, and Avangrid were provided by CCA Group, Santander Corporate & Investment Banking, and Kirkland & Ellis LLP.
Copenhagen Infrastructure Partners (CIP) is a globally renowned leader in green energy investment, specializing in offshore and onshore wind, solar PV, biomass and energy-from-waste, transmission and distribution, reserve capacity, storage, advanced bioenergy, and Power-to-X. Established in 2012, CIP is now the largest dedicated fund manager for greenfield renewable energy investments worldwide.