Arevon Energy has closed about $1.085 billion to build Eland 2, a solar and battery project in California. Three months earlier it financed a similar project, Vikings, by selling its tax credits to a buyer. For Eland 2 it did something different and brought in a tax equity investor. Same developer, same state, same technology mix, two different answers to the same question.
Key takeaways
- Arevon Energy secured a $1.085 billion financing package for the Eland 2 solar and battery storage project in California, announced on 22 February 2024, combining a $654 million construction-to-term loan, tax equity bridge and letter of credit facilities with a $431 million tax equity investment.
- Eland 2 comprises 374 MWdc, 200 MWac of solar and a 150 MW battery built with Tesla Megapack 2 XL systems, was expected to begin operations in the first quarter of 2025, and sells power under a long-term PPA with the Southern California Public Power Authority.
- The Eland 2 lenders and investors included CIBC, BNP Paribas, CoBank, Commerzbank, Commonwealth Bank of Australia, National Bank of Canada, J.P. Morgan and Wells Fargo.
- Arevon's Vikings solar and battery project in California, 157 MW of solar and 150 MW of storage, was financed in November 2023 with a $529 million package of $338 million in debt and $191 million from the sale of investment and production tax credits.
- Enerdatics records 45 US solar financings flagged with co-located storage announced between July 2023 and June 2024; at $1.085 billion, Eland 2 is the third largest, behind two records of $1.2 billion each.
What is the difference between tax equity and a tax credit sale?
Tax equity makes the investor a part owner of the project. A tax credit sale does not. That is the core distinction, and it explains why the two Arevon financings look different.
A tax equity investor puts cash into a project partnership and in return takes most of the tax benefits, plus a share of cash flow, until it reaches an agreed return. It then steps back and the developer keeps the project. Its weakness is that relatively few large banks and insurers have enough tax liability to use the credits, which limits the pool of investors.
A tax credit sale, or transfer, was made possible by the Inflation Reduction Act. The developer simply sells the credits for cash to any company with a tax bill. The buyer takes no ownership stake. The structure is simpler, but a transfer covers the credits alone, while a partnership can also pass on depreciation and a share of cash flow.
Why would Arevon choose differently for two similar projects?
Leap's records do not say, so the reasons have to be read from the structures rather than stated. Both are California solar projects paired with a 150 MW battery. Both closed within about three months of each other. The visible differences are size and the source of the non-debt money.
Eland 2 is the larger project, with 200 MWac of solar against 157 MW at Vikings. Its total package is roughly twice the size. Its non-debt layer, $431 million of tax equity, is also more than twice the $191 million Vikings raised from selling credits. A tax equity investor brings more capital per dollar of credit than a transfer buyer does, because it also captures depreciation and a share of cash flow. On a project of Eland 2's size, that difference becomes a large number.
The adviser lists point the same way. On Eland 2, Sheppard Mullin served as tax equity counsel, Milbank as lender counsel and Amis, Patel & Brewer as Arevon's legal adviser. On Vikings, Milbank acted as transfer counsel and Winston & Strawn as lender counsel. J.P. Morgan, BNP Paribas and National Bank of Canada sit on both packages. Wells Fargo, CoBank and Commerzbank appear only on Eland 2.
Is the $1.085 billion headline the amount of new money?
Not quite, and the structure explains why. The $654 million loan package includes a tax equity bridge. A bridge loan of this kind funds the project during construction and is repaid when the tax equity investor puts in its money, usually at completion. That means part of the loan and the $431 million of tax equity can describe the same dollars at two points in time.
Leap records the bridge as a component of the loan without giving its size, so the overlap cannot be measured. It is the same pattern as Excelsior's Faraday solar and battery financing in Utah, where a $300 million tax equity bridge loan sat inside a $1.01 billion bank package and $400 million of tax equity was recorded alongside it. The headline totals are accurate records of what was signed. They are not a measure of the capital the projects cost.
Enerdatics' data shows how large Eland 2 is in its own category. Enerdatics records 45 US solar financings flagged with co-located storage announced between July 2023 and June 2024. Eland 2's $1.085 billion is the third largest. Only Copia Power's $1.2 billion loan for its Harquahala Sun 1 and 2 projects and energyRe's $1.2 billion portfolio package are bigger. Tax equity makes up about 40 percent of the Eland 2 package, against about 28 percent of Faraday's combined $1.41 billion and about 36 percent for the tax credit sale within Vikings.
What does the deal signal for US solar and storage financing?
It signals that the arrival of tax credit transfers has not replaced tax equity. It has given developers a choice, and some are using both. Arevon itself shows the range. Alongside Eland 2 and Vikings, its Condor battery financing in California paired a tax credit transfer with preferred equity from Blackstone rather than a traditional tax equity investor.
Other developers have mixed the tools within a single financing. Origis Energy's $317 million tax equity raise from J.P. Morgan used both the investment tax credit and the production tax credit across two projects.
For lenders, the choice changes what they are financing. A tax equity bridge is repaid by a single investor at a single moment. A loan against transferred credits depends on a buyer paying as credits are earned. Eland 2 sits firmly on the first model, with a public power authority as the long-term buyer of its output.
Frequently asked questions
How much did Arevon raise for Eland 2? About $1.085 billion, announced on 22 February 2024: a $654 million construction-to-term loan, tax equity bridge and letter of credit package, plus a $431 million tax equity investment.
What is Eland 2? A 374 MWdc, 200 MWac solar project with a 150 MW battery in California, using Tesla Megapack 2 XL systems. It was expected to start operating in the first quarter of 2025 and sells power under a long-term PPA with the Southern California Public Power Authority.
How did Arevon finance Vikings differently? Vikings, 157 MW of solar and 150 MW of storage in California, raised $529 million in November 2023: $338 million of debt and $191 million from selling investment and production tax credits, with no tax equity investor.
Ready to get deal-ready answers in seconds? Try Enerdatics Leap AI and access verified intelligence across M&A, financings, PPAs, projects, and energy market developments through natural language.
.jpeg)
