Greenbacker Capital Management, a US-based investment firm specialising in sustainable infrastructure and renewable energy projects, has announced a major milestone in renewable energy development, securing nearly US$1 billion in financing to acquire and construct the largest solar energy project in New York State.

The financing package is a critical step forward in bringing the 240-megawatt Howard solar project to life, marking a significant expansion of Greenbacker's renewable energy portfolio.

Standout L/C facility

A standout feature of this financing arrangement is the inclusion of a US$320 million letter of credit (L/C) facility.

It is crucial in this complex infrastructure project, offering financial assurance to suppliers and contractors by guaranteeing payment obligations under specific conditions.

In this case, the L/C provides liquidity and confidence to key stakeholders involved in the massive solar venture, ensuring smooth progress throughout the development and construction phases.

Financing participants

The financing is led by KeyBank NA and Truist Securities, with support from five other financial institutions. This collaborative effort showcases the growing role of the banking sector in backing large-scale renewable energy projects.

Notably, the L/C portion plays a pivotal role in maintaining cash flow stability, particularly during construction, when upfront costs and long lead times pose challenges to developers.

Green benefits

The Howard solar project is reckoned by Greenbacker to be a potential game-changer for New York State's renewable energy landscape. The site will provide clean energy to power over 47,000 homes annually while contributing to the state's ambitious clean energy goals.

Once operational, it will also create long-term jobs and generate significant tax revenues for the local community, underscoring its broader economic benefits.

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