This article was published by The Energy Mix on Jan. 11, 2024.
By Christopher Bonasia
After a hard year for offshore wind, Pattern Energy recently closed financing for its SunZia Transmission and SunZia Wind developments in New Mexico, which together form the biggest clean energy infrastructure project in United States history.
The company, owned by the Canada Pension Plan Investment Board and headquartered in San Francisco, announced in a December 27 release that construction on the project is already “well under way.”
The 885-kilometre, 525-kilovolt high-voltage direct current (HVDC) SunZia transmission line between central New Mexico and south-central Arizona is expected to transport 3,000 megawatts of electricity from the 3,515-MW SunZia Wind, which is set to be the largest wind project in the Western Hemisphere, the company said.
This week, GE Vernova announced it will provide the 674 turbines needed for the project.
“Backers see SunZia—described as an energy infrastructure undertaking larger than that of the Hoover Dam—as a pivotal project,” writes the Associated Press. “The venture has attracted significant financial capital and stands to boost the percentage of the nation’s electricity that comes from renewable sources amid escalating state and federal energy mandates.”
Financing for the combined projects totalled around US$11 billion, with $8.8 billion for construction and term facilities and $2.25 billion in tax equity. It moves forward a behemoth effort years in the making. Pattern Energy purchased SunZia in July 2022, but the initial plans for the project date back to 2006, when they were introduced by then owner Southwestern Power Group.
The recent “groundbreaking financing” includes an integrated construction loan and letter of credit facility, two separate term facilities, an operating phase letter of credit facility, an innovative tax equity term loan facility, and a holding company loan facility, Pattern Energy said in its release.
The project is expected to go online in 2026, and the company says it will generate $20.5 billion in economic benefits, bringing clean power to three million homes.
Pattern’s financing announcement comes as the wind industry struggles against rising inflation and barriers to certification and implementation in the U.S. BP and Equinor ASA recently terminated their Offshore Wind Renewable Energy Certificate Agreement with New York State for the 1.3-gigawatt Empire Wind 2 project in the Atlantic Ocean, stating that economic circumstances have made it unviable. Across the industry, companies are having to recalculate budgets to accommodate high costs and supply chain issues, and some major projects have folded.
“It appears that the economies of scale just aren’t enough to help these projects amid these macroeconomic events,” Timothy Fox, an analyst at ClearView Energy Partners, told Bloomberg News.
But 2024 is expected to bring better prospects for offshore wind, reports the Globe and Mail. Regulators are taking steps to move projects forward, including helping companies exit old contracts and re-offer at higher prices.
“State procurements and policies will continue to drive demand for offshore wind energy and federal support will enable more job creation, supply chain investment, and domestic energy production,” said Ryan Ferguson, a spokesperson for Danish wind energy giant Ørsted.