The Alta Wind Energy Center is a 3,000 MW wind power development initiative. Along with the 150 MW Alta Project I utilizing GE wind turbines, which closed financing and commenced construction in March 2010, this financing puts Terra-Gen well on its way to completing what is anticipated to be the largest wind energy farm in the nation.
The $1.2 billion financing for the Alta Projects II-V included the issuance of approximately $580 million of pass through certificates due 2035 via a Rule 144A offering, a construction bridge loan facility of $499 million and ancillary credit facilities of $127 million. Proceeds from the certificates and bridge loans will be used to fund construction of the projects.
Citi, Barclays Capital and Credit Suisse acted as joint book-running managers for the issuance of the pass through certificates, and Mitsubishi UFJ Securities, Credit Agricole Securities, ING, and Rabo Securities acted as co-managers. MUFG Power & Utilities Group, Credit Agricole, ING Capital, Rabobank, Citi, Barclays, and Bank of Montreal provided the credit facilities, with Credit Agricole acting as administrative agent and MUFG Power & Utilities Group, Credit Agricole, ING Capital, Rabobank, Citi, and Barclays acting as joint lead arrangers.
The permanent financing of Alta Projects II-V is structured as a leveraged lease whereby Citibank, N.A. has committed to purchase the projects at the start of commercial operations and lease them back to Terra-Gen. Terra-Gen will continue to manage and operate the wind farm projects under long-term agreements. “We believe this transaction is the first to be structured as a leveraged lease in the wind space as well as the first 144A bond issuance for wind assets since 2005. We are hopeful that these benchmarks will expand the capital base available to fund future growth in the renewables sector,” said John O’Connor, CFO of Terra-Gen.
The Alta Wind Energy Center is expected ultimately to provide up to 3,000 MW of pollution-free electrical generating capacity, 1,550 MW of which will fulfill a power purchase agreement signed with Southern California Edison in 2006. With 720 MW of wind power, the initial five projects will increase the installed wind capacity in California by more than 25% and deliver enough clean, renewable energy to supply up to two hundred thousand homes.
“We are delighted to have closed this financing and to be working with Vestas and GE on the Alta projects. The project represents an important expansion of the renewable generating base of California and helps us advance our nation’s goals of achieving energy independence in an environmentally responsible manner,” said Jim Pagano, CEO of Terra-Gen.
“The Alta projects I-V will create more than 1,500 domestic manufacturing, construction and operation and maintenance jobs, and inject more than $600 million into the local economy. We are grateful to Kern County, the State of California, the U.S. Congress, and the Treasury Department for their supportive renewable energy policies, without which ambitious projects like the Alta Wind Energy Center would simply not be possible.”
Project construction is expected to begin immediately, with commercial operation anticipated in the first and second quarters of 2011. Delivery and commissioning of the Vestas turbines will begin in October 2010. Alta Project I is anticipated to begin commercial operations in January 2011.
Terra-Gen is an affiliate of ArcLight Capital Partners and Global Infrastructure Partners. With more than 830 megawatts of generating capacity in operation and 720 megawatts under construction, Terra-Gen Power is one of the nation’s leading renewable energy providers and is the only American company that provides electricity on a utility scale from all three major renewable energy sources: wind, solar and geothermal power. Terra-Gen currently has 21 renewable energy projects in operation in six states, and more than 5,000 megawatts of renewable energy capacity under development.
Terra-Gen Power is a leading renewable energy company headquartered in New York City with offices in San Diego, Denver, and Reno. Its operating company subsidiary Terra-Gen Finance Company owns 831 MW (net) of renewable generating facilities across 21 projects, 19 of which are operated and managed by Terra-Gen. Terra Gen’s development subsidiaries hold over 5,000 MW of wind energy, geothermal, and solar development projects, including the 3,000 MW Alta Wind Energy Center development project in Tehachapi, CA which is being developed by Terra-Gen’s California Highwind Power subsidiary.
ArcLight is one of the world’s leading energy investment firms with more than $6.8 billion under management. ArcLight’s investment team has extensive energy investing experience, industry relationships, and asset level knowledge. ArcLight is one of the most experienced renewable power investors having made its initial investment in Terra-Gen Power’s predecessor company in 2002. ArcLight is headquartered in Boston, Massachusetts with offices in New York City, London and Luxembourg.
GIP is an independent infrastructure fund that invests worldwide in infrastructure assets and businesses in both OECD and selected emerging market countries. GIP has offices in New York and London with an affiliate in Sydney and portfolio business operations headquarters in Stamford, Connecticut.