The first Greenhouse Gas Reduction Fund deal has been inked, just six weeks after the awards were finalized by the Environmental Protection Agency.
Climate United, a coalition led by Calvert Impact, has extended a $31.8 million loan to an Arkansas-based solar power developer to cover pre-construction costs for 18 solar plants for the University of Arkansas System, a state-funded network of schools, including the University of Arkansas at Pine Bluff, a historically Black university. The 66 megawatt project is the largest commercial and industrial solar deployment in Arkansas.
The transaction is Climate United’s first from its nearly $7 billion pot, and the first among awardees of the National Clean Investment Fund, which also include the Coalition for Green Capital, a network of green banks, and Power Forward Communities, which includes community lenders, housing nonprofits and advocacy group Rewiring America.
Affordable housing financier Community Preservation Corporation and community lender Self-Help are also part of the Climate United Coalition.
“We’re excited to be the first project for Climate United and to deploy all of these solar power plants in every region of the state,” said Bill Halter of Scenic Hill Solar, the project developer.
The project is expected to save the university over $120 million in energy costs over the next 25 years, savings that Halter said can be plowed into education or tuition reductions.
Catalytic capital
The loan, made out of the Climate United Fund, the coalition’s prime grant recipient, will cover the costs of interconnections as well as land and equipment acquisition for the project, which will bring clean energy to the state university system’s 70,000 students.
Such pre-development financing can be difficult to come by. “There are not many lenders or suppliers of debt capital that would have funded this, and if they did it would have been at double digit interest rates,” said Halter.
Adds Climate United’s Beth Bafford, “This is a good example of where there is an uneven playing field for smaller developers that we’re trying to address.”
The injection of funds comes just in the nick of time for Scenic Hill: it was able to pay for utility interconnection upgrades by a Sept. 30 deadline, after which more stringent net metering rules in Arkansas would kick in.
The financing also paves the way for private capital to come in and capitalize the next phases of the project, which Halter expects to cost more than $110 million. The project will qualify for solar tax credits under the Inflation Reduction Act, as well as credits for projects in so-called “energy communities” and for using US-made equipment. The University of Arkansas System is also spearheading workforce development initiatives to train students for jobs in renewable energy construction and electric vehicle repair.
The deal, said Bafford, is “the first of many.” She expects Climate United and its partners to close more deals by the end of the year before kicking into high gear in 2025.
With the Arkansas project, “We’re trying to really show what this program looks like on the ground and how these programs will benefit the ecosystem,” said Bafford. “It’s an exciting demo of our strategy in action.”
