Texas wind project raising cash equity

Texas wind project raising cash equity

FGE Power, the Austin-based renewables developer, is in the market for cash equity for a 506 MW two-phase wind project in ERCOT West, according to two sources familiar with the matter.

Whitehall & Company is the exclusive financial advisor and placement agent for the Goodnight Wind project located in Armstrong County, Texas, according to the sources.

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Goodnight is in the advanced stages of development and FGE expects to enter 10-to-15-year offtake agreements with one or more investment grade counterparties, according to one of the sources. Total estimated project costs for Goodnight Wind I (253 MW) and Goodnight Wind II (253 MW) are USD 366.5m and USD 358.5m, respectively.

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A 3Q21 close is being targeted for both phases, which would allow them to reach COD by 4Q22, one of the sources said. 

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Each project will include a capital structure of 48% tax equity, 42% cash equity and 10% back leverage, according to one of the sources. FGE is in advanced negotiations with a tax equity investor to provide for both phases.

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The equipment will be fortified against extreme hot and cold weather events, said one source, partially in reference to the freeze that drove ERCOT into crisis early this year when Texas was hit with unusually cold temperatures during winter storm Uri.

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“Texas wind, in the panhandle, isn’t for everyone,” said the source, referring to the market post-Uri. But, mounting ESG pressure and a favorable regulatory environment under President Joe Biden make Goodnight potentially attractive to private equity, infra funds and strategics.  

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Whitehall and FGE did not respond to requests for comment.