Innergex Renewable Energy Inc. [INE-TSX] closed a construction financing and tax equity commitment for its Griffin Trail Project, a 225-megawatt wind facility located in Knox and Baylor counties, in northwestern Texas. The US$276.2 million (CAN$354.5 million) financing has been arranged with Sumitomo Mitsui Banking Corp. acting as Coordinating Lead Arranger, and CIBC acting as Joint Lead Arranger, backed by a US$171.4 million (CAN$220.0 million) tax equity commitment from Wells Fargo to be provided upon the commercial operation date.
“It was only a few months ago, when the U.S. Production Tax Credits deadlines were extended, that we knew we were in a strong position to bring Griffin Trail forward, and we have since made rapid progress on development and construction,” said Michel Letellier, President and CEO of Innergex.
Work on-site commenced in September and is progressing well with the operations and maintenance building and road construction well underway, and approximately 50% of foundations complete. A construction agreement was executed with Blattner Energy, Inc. and a Turbine Supply Agreement was executed for the supply of GE wind turbines totaling 225 MW with deliveries starting in January 2021. Deliveries of long-lead items have started and the construction of the interconnection point is underway by a local transmission provider.
Total construction costs are estimated at US$284.7 million (CAN$365.4 million) and commissioning is scheduled for Q3 2021. Power generated will be fed into the ERCOT transmission grid and sold on the spot market.
The project is expected to produce a gross estimated long-term average of 819.0 GWh per year, enough to power approximately 57,000 Texan households and to benefit from 100% of the US Production Tax Credits (PTCs), representing US$0.025 (CAN$0.032), indexed to inflation, per KWh of electricity produced for the first 10 years. Griffin Trail should generate a projected Adjusted EBITDA of US$4.5 million (CAN$5.8 million) and a projected Adjusted EBITDA Proportionate with PTCs of approximately US$26.7 million (CAN$34.3 million) per year on average for the first five years.
The tax equity commitment by Wells Fargo includes a partial pay as you go (Pay-go) funding arrangement under which, when the actual annual MWh production exceeds a certain production threshold, the Tax Equity Investor is obligated to make a cash contribution to the Corporation. Expected Annual Pay-go Contribution for the Griffin Trail Project is $4.0 million (CAN$5.2 million). In total, the project should generate an annual contribution of US$30.7 million (CAN$39.4 million) when combining the projected Adjusted EBITDA Proportionate and the Pay-go Contribution.