Intersect Power LLC has announced the closing of two separate transactions representing a total of $837 million in financial commitments for the construction and operation of three battery energy storage systems (BESS) in Texas. This financing covers construction debt at portfolio level, tax credits and long-term debt with leading industrial partners. The three BESSs, named Lumina I, Lumina II and Radian, are scheduled to be operational in 2024. Each project will include 86 Megapacks, Tesla’s battery energy storage system, with Lumina II and Radian managed by Tesla’s real-time trading platform, Autobidder. These sites will go from concept to commissioning in less than 12 months, each offering a capacity of 320 MWh with a duration of two hours. These batteries will offer additional flexibility to Intersect’s operating fleet in Texas, providing 1.2 GWp of solar power with 1 GWh of storage per battery.
Financial partners and transaction structure
Morgan Stanley has been chosen to provide the tax credits, and funds managed by HPS Investment Partners will make investments in construction and long-term debt. Deutsche Bank also participates in construction debt and provides operational letters of credit for projects. These projects are eligible for investment tax credits under the Inflation Reduction Act. Jorge Iragorri, Managing Director and Head of Renewable Energy Investments at Morgan Stanley, said, “Morgan Stanley is proud to partner again with Intersect Power. These stand-alone batteries are necessary infrastructure that will improve grid reliability and energy security as the U.S. transitions to a low-carbon economy.” Michael Dorenfeld, Managing Director at HPS Investment Partners, added: “We are delighted to have another opportunity to work with Intersect Power, which continues to demonstrate its market leadership through its innovative approach to contracting and financing.”
Development challenges and prospects
Intersect Power and its partners were represented by Orrick, Herrington & Sutcliffe LLP as lead advisor on all transactions; CCA Capital LLC advised Intersect Power on tax credit transactions; Willkie Farr & Gallagher LLP served as advisor to Morgan Stanley Renewables Inc. and Skadden, Arps, Slate, Meagher & Flom LLP represented HPS and Deutsche Bank. This initiative marks a significant step towards Intersect Power’s goal of tripling the size of its portfolio over the next three years. Battery energy storage systems are essential for managing volatile energy market prices and stabilizing revenues from renewable energy projects.
