Enel signs tax equity for the 300 MW Red Dirt wind project
Enel Green Power North America, Inc. (EGPNA), the Enel Group’s US renewable energy company, acting through its subsidiary Red Dirt Wind Holdings, LLC, has signed a tax equity agreement worth approximately US$340 million with MUFG and Allianz Renewable Energy Partners of America LLC (Allianz) for the 300 MW Red Dirt wind project located in Oklahoma.
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% 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% 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 S.p.A.
The Red Dirt wind project, whose construction started in April, is expected to begin operations by the end of 2017. The investment in Red Dirt amounts to, approximately, US$420 million.
Once fully up and running, Red Dirt will be able to generate approximately 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 CO2 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.
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