Lightsource BP, the U.K.-based solar developer backed by BP, secured a power-purchase agreement for a 132-megawatt solar project in Arkansas that would nearly double that state’s utility-scale capacity, currently at 147 megawatts.
Municipal utility Conway Corporation will use power from the project, called Happy Solar, which is slated for commercial operation in 2022.
The project — finalized from the living rooms and home offices of company executives as a result of the coronavirus pandemic — shows that deals are still getting done in the U.S. solar market, even as the economy takes a significant downturn.
For Lightsource, the project suggests a growing interest in engaging with smaller, more local utilities. Those types of deals often involve more collaboration, Kevin Smith, Lightsource's CEO for the Americas, told GTM.
“The bigger utilities have done dozens and dozens of renewable energy contracts, so it’s a little bit more business-as-usual. They have their procedures and policies and contract structures,” he said. “In reality, it’s a little bit more fun working with some of the co-ops and municipals that are new to the renewable energy sector.”
Lightsource is looking toward new geographies — everywhere east of Colorado — and new power offtakers as solar prices drop. Last year, the developer signed a deal for a 130-megawatt project with the Alabama Municipal Electric Authority, a cooperative utility with 11 municipal members in the state.
“The midsize groups, like Conway, like AMEA — there’s a lot more interface because the projects are groundbreaking for them,” said Smith.
City-owned Conway is something of a catchall utility. The company provides cable, internet and telephone service, plus water and even home security systems in the city it serves, north of Little Rock. The utility has 30,000 electricity customers, and the Happy project is expected to provide enough electricity to power 21,400 homes each year. Conway has invested in one other solar project, expected to provide annual electricity for 150 homes.
“A different market”
Large-scale projects being announced right now have been in the works for some time, but the completion of any big deals is noteworthy in the current climate.
Last month, Lightsource announced the financing of a 260-megawatt Texas project during a week when financial markets saw their worst declines since October 2008, which kicked off the Great Recession.
“Certainly, it is a different market,” said Smith. “In these kinds of times, you typically see [financiers] moving toward solid projects and solid developers that have the financial staying power to make sure projects get done and constructed properly.”
Banks such as JPMorgan and Bank of America have said they are working to assure the industry they’re still interested in projects, despite early concerns that tax equity may dissipate if the economy continues to worsen.
“Quality projects will be able to find financing even in uncertain times,” said Yale Henderson, managing director and head of energy investments for JPMorgan, during a late March call on tax equity hosted by law firm Norton Rose Fulbright. “We have a very full plate.”