JPMorgan invests $680 million in Orsted solar and storage projects

Renewable energy developer, or Stead today announcing a major investment into one of its projects in Arizona, all fueled by the Inflation Reduction Act. Pippa Stevens is live. In Coolidge, Pippa. Hey, Morgan. Well, Orsted is wrapping up construction at this $1 billion solar and battery storage site about an hour outside of Phoenix. Now, the news today is the company is announcing a $680 million investment from JP Morgan. It's a tax equity deal, meaning JP Morgan provides financing in exchange for tax benefits. Now, this structure has existed for years, but what's new is that under the Inflation Reduction Act, JP Morgan can now sell those credits to another company. Looking a big new funding pool for renewable energy? And it really opens the doors for a lot more corporates and companies with tax liability in the United States to come in and help support clean energy projects. It's a really unique structure that we hope to replicate over and over again. The new IRA rules could open up 47 billion in tax credit sales this year, rising to more than 100 billion in 20-30, according to Evercore ISI. At this project, called 11 Mile Solar, there are more than 857,000 solar panels and 2000 battery cubes across 2000 acres. It can power about 65,000 homes, but 2/3 of the power is going to be for a new metadata center being built close by. Orsted sells the power to SRP, that's the local utility, which then sells it to Meta to power that data center. And guys, as you've been talking about, this huge Gen. AI boom is leading to a whole lot of new electricity demand. Pepa, it's really fascinating, especially the idea that you can then offload these tax credits to another buyer. Do we know how many of these projects are in the works? And when we talk about the fact that this is specifically geared at renewable energy, what are the types of renewable energy? Is something like, for example, nuclear potentially involved as well? Yeah. So the IRA extended these credits, extended the ITC and the PTC, and then it also introduced new credits for projects like nuclear, as you mentioned, as well as hydrogen. And So what we've seen is that prior to the IRA, about $20 billion in tax equity deals were done per year. But by the end of the decade, that could rise to more than 100 billion simply because of this tax transfer provision. It opens up a whole new stake for corporate buyers. And so far, we're seeing deals north of $0.90 on the dollar, meaning it is very attractive for corporates that want to reduce their tax liabilities as well as. Provide funding for clean energy. And so there's a lot of momentum around what that could mean looking forward and getting these very capital intensive projects off the ground. Hippo, great visual look at such an important story, just not just for the industry, but the economy too. That's our Pippa Stevens.