A multi-million dollar letter of credit (L/C) facility features in the US$513 million financing closed last week by solar and energy storage project developer, Recurrent Energy, for its 1,200 megawatt per hour energy storage project in Arizona.

Papago Storage, the largest energy storage project in Arizona, holds a 20-year tolling agreement with Arizona Public Service Company which will pay the project developer a predetermined fee for converting the fuel into electricity.

Project outline

Construction of the 1,200 MWh Papago Storage is slated to commence in the third quarter of 2024, with commercial operations expected to begin in the second quarter of 2025.

The project will be built and operated by Recurrent Energy, a subsidiary of Canadian Solar, and is expected to create 200 jobs during construction.

Papago expects to dispatch enough power for approximately 244,000 homes for four hours daily, enabling renewable energy to further power the US state of Arizona's economy.

Financing details

MUFG and Nord/LB acted as coordinating lead arrangers for the Papago Storage project financing.

The financing includes a US$249 million construction and term loan, a US$163 million tax equity bridge loan, and a US$101 million L/C facility.

Joint lead arrangers for the transaction included Bank of America, CoBank, DNB, Rabobank, Siemens Financial Services, and Zions.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.