Lightsource bp has borrowed $348 million from five banks to build two solar farms in Texas, one in Starr County and one in Brazoria County. Together they come to 236 MW. On a per MW basis the loan lands almost exactly where a much larger Texas solar project borrowed weeks later. The headline number hides a component that does not behave like an ordinary construction loan.
Key takeaways
- Lightsource bp secured $348 million of financing from Societe Generale, ING, NatWest, Lloyds Banking Group and Allied Irish Banks for two utility-scale solar projects in Texas, announced on 21 February 2024.
- Lightsource bp's $348 million Texas financing supports construction and operation of the 136 MW Starr Solar project in Starr County and the 100 MW Second Division Solar project in Brazoria County.
- The Lightsource bp financing for Starr and Second Division includes transferability facilities enabled by the Inflation Reduction Act; Leap does not record how the $348 million splits between them and the construction debt.
- Second Division Solar began construction in August 2023 with commercial operation anticipated in the third quarter of 2024, and Starr Solar began construction in June 2023 with operation anticipated by the fourth quarter of 2024.
- Lightsource bp's $348 million across 236 MW works out at about $1.47 million per MW, against $1.44 million per MW for Primergy's $588 million financing of the 408 MW Ash Creek project in Texas in March 2024.
What is a transferability facility?
It is a loan sized against the cash a project expects to receive when it sells its tax credits. The Inflation Reduction Act allows the owner of a clean energy project to sell its federal tax credits to a third party. That sale only pays out once the project is built and the credits are earned. A transferability facility bridges the gap, giving the developer the money during construction and being repaid from the credit sale proceeds.
That matters for reading the $348 million. Part of it is ordinary construction and term debt, repaid over years from power revenue. Part of it is short-dated money, repaid in one go when a credit buyer pays. Leap's record confirms both are present but does not break out the amounts.
It also means the per MW figure is not a pure measure of leverage. A loan that pre-funds tax credit proceeds adds to the total without adding to the debt a project has to service from electricity sales.
Why finance two projects in one package?
Because two projects of 136 MW and 100 MW are each small for a bank syndicate. One facility spreads arranging and legal costs across 236 MW and gives five lenders a ticket worth taking. The two sites are also on similar timetables. Construction at Starr began in June 2023 and at Second Division in August 2023, with commercial operation expected in the fourth and third quarters of 2024 respectively.
The trade off is that the projects are bound together for the lenders even though they sit in different parts of Texas. Starr County is on the Mexican border in the south. Brazoria County is on the Gulf Coast south of Houston. Different sites mean different solar resource and different grid conditions, which is usually a benefit to lenders because one project's bad year need not coincide with the other's.
The lender group is also distinctive. All five banks are European: Societe Generale, ING, NatWest, Lloyds Banking Group and Allied Irish Banks. Primergy's Ash Creek loan in Texas a few weeks later, by contrast, was led by MUFG and Sumitomo Mitsui Banking Corporation.
How does the price of the debt compare?
Almost exactly in line with the closest comparable. Primergy's $588 million for the 408 MW Ash Creek project, announced in March 2024 and also in ERCOT, works out at about $1.44 million per MW. Lightsource bp's package is about $1.47 million per MW, despite covering two projects with a combined capacity little more than half of Ash Creek's.
Enerdatics' data shows how few of these loans can be read that way. Enerdatics records 23 debt financings for US solar projects under construction announced between October 2023 and June 2024. Six of them are in ERCOT: Ashtrom's $270 million for Tierra Bonita, SB Energy's $1.65 billion portfolio facility, $144 million for the Sunray project, Lightsource bp's $348 million, Primergy's $588 million for Ash Creek and Sabanci's $243 million for Oriana. Only Primergy's and Lightsource bp's headlines state the capacity financed, which is what makes a per MW comparison possible.
The match suggests banks were sizing Texas solar construction debt at a similar level per MW whichever developer and lender group was involved, at least in early 2024. Neither record discloses margins or tenors, so the comparison is about quantum rather than pricing.
What does the deal signal for US solar project finance?
It signals that tax credit transferability had already been absorbed into ordinary bank financing by early 2024. Within two years of the Inflation Reduction Act, a mid-sized developer could raise construction money against expected credit sales from a mainstream syndicate, and Leap's record lists no tax equity investor in the package.
It also came at a moment of change for the borrower. bp had agreed in November 2023 to buy the half of Lightsource bp it did not already own, a deal that completed in October 2024. The Texas financing closed while that takeover was pending, which shows the developer continuing to fund its US pipeline on a project basis rather than waiting for its new parent.
Other mid-sized US solar developers were taking a similar route. Opdenergy's financing for its Blake and Elizabeth plants also packaged two projects under construction in one facility, with tax equity alongside the bank debt.
Frequently asked questions
How much did Lightsource bp raise for its Texas solar projects? $348 million from Societe Generale, ING, NatWest, Lloyds Banking Group and Allied Irish Banks, announced on 21 February 2024, for the 136 MW Starr Solar and 100 MW Second Division Solar projects.
What are transferability facilities? Loans sized against the expected proceeds of selling a project's federal tax credits under the Inflation Reduction Act, repaid when the credit buyer pays. The Lightsource bp package includes them, but Leap does not disclose their size.
How does the Lightsource bp loan compare with other Texas solar financings? At about $1.47 million per MW, it is close to Primergy's $588 million financing of the 408 MW Ash Creek project, at about $1.44 million per MW.
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