October 21, 2022

INTERVIEW: Primergy CEO previews near-term pipeline, how IRA2022 will impact solar+storage project development 

 Financing Interview Policy 

 by Jon Berke 

Primergy Solar is readying itself for a big 2023 with hopes to finally get Gemini Solar + Storage project commercialized by the end of the year, while it would also like to get two of its other projects under construction by then as well, said the company’s CEO Ty Daul in an interview with NPM. 

Daul has come off a rather transformational year for Primergy, portfolio company of Quinbrook Infrastructure Partners, as it capitalized its signature Gemini Solar + Storage project in the Nevada desert with USD 1.9bn in debt and tax equity in the spring and earlier this week sold a minority stake in the project to Dutch pension manager APG. 

Up next for Primergy is a 600 MWac portfolio spread across three projects in MISO, PJM and ERCOT that are well advanced for 2024 and 2025 commercial operation dates (CODs) and construction is expected before the end of next year on at least two of those projects. In the medium term, Primergy is also revisiting Nevada with another massive utility scale solar + storage project—Nettleleaf—off federal lands and separately Hesperus in Colorado which it already contracted its output to Guzman Energy but is not expected online until 2025. 

Once formal guidance is issued by the IRS, Primergy Solar will certainly have options on how to finance this pipeline as the Inflation Reduction Act (IRA) of 2022 reinstates the Investment Tax Credit (ITC) at 30% and on a 10-year runway for solar and reinstates the Production Tax Credit (PTC) on a more limiting basis. 

“We are looking at all of our projects to determine the optimal ITC or PTC structure which will be based primarily on total projects costs and energy yield,” said Daul, adding that the “PTC structures favor projects that have lower relative total costs and higher energy yields.” 

Daul added that while each project varies, the higher tax credits would likely result in a larger percentage of the capital stack going towards tax equity with a somewhat similar reduction going towards long-term debt. 

Given how inflation has already raised interest rates and is forecasted to get higher in the near future, Daul said this is just another factor contributing to higher off-take pricing over the past year, along with “higher equipment costs due to inflationary and trade issues.” 

Daul hopes that in the near term the federal government can help alleviate some of the trade related bottlenecks that are leading to these increased costs and thus slowing the implementation of clean energy projects. 

Once the IRS implements formal guidance around issues such as domestic content requirements, the environment is going to improve considerably under IRA2022 due to domestic manufacturing credits. 

“Many of the mobile, tracker and battery manufacturers could easily be producing US manufactured products in the next two years.” said Daul.