Energy developer Ørsted announced that it has received a $680 million investment in tax equity financing from J.P. Morgan, aimed at funding the construction of new solar and storage projects in Texas and Arizona.

According to Ørsted, the investment marks one of the largest solar and storage tax equity transactions using a combined production tax credit (PTC) and investment tax credit (ITC) structure since the passage of the Inflation Reduction Act (IRA). Signed into law by President Biden in 2022, the IRA allocated nearly $370 billion through a series of tax credits, loans, grants and subsidies to areas including renewable energy and industrial decarbonization solutions, and for the first time made these tax credits transferable, creating a new mechanism for funding energy transition projects.

In the company’s statement announcing the investment, Ørsted said:

“This new tax credit transfer option, created by the IRA, opened a new market for any corporate buyer to support clean energy projects and optimize their federal tax bill through the purchase of tax credits.”

The financing will be used to help fund the completion of the 300 MW solar and 300 MW storage Eleven Mile Solar Center project in Pinal County, Arizona, and the 250 MW Sparta Solar project in Mineral, Texas. Under the terms of the deal, the Eleven Mile Solar Center will receive a one-time investment tax credit for its battery storage system, and the solar farm will generate production tax credits over a ten-year period.

Commercial operations for each of the projects are expected to begin this year. Ørsted announced a an agreement in December with Meta to supply the majority portion of the solar energy generated by the Eleven Mile Solar Center for Meta’s Mesa data center.

Ørsted noted that the deal builds on J.P. Morgan’s existing investments in 1.8 GW of the company’s U.S. onshore portfolio.

James Giamarino, Chief Commercial Officer for the Americas at Ørsted, said:

“Ørsted is an experienced developer and operator of renewable energy projects in the U.S., including offshore and onshore wind, solar, and battery storage, all of which will generate tax credits valuable to investors. With this new market unlocked by the IRA, we’re excited to continue our tax equity partnership with J.P. Morgan and bring on new entities looking to advance the U.S. renewable energy industry, support job growth, and promote local economic development.”