Recurrent Energy has borrowed $160 million from MUFG to build Bayou Galion, a solar project in northeast Louisiana. Microsoft has agreed to buy all of the project's energy and renewable energy credits. Two years earlier, Louisiana's regulator approved a 20-year contract for the same project with a rural electric cooperative. Both contracts sit in Leap, and the announcements do not explain how they fit together.
Key takeaways
- Recurrent Energy, a subsidiary of Canadian Solar, secured $160 million of debt from Mitsubishi UFJ Financial Group (MUFG), announced on 6 February 2024, for the construction and operation of the Bayou Galion solar project in Morehouse Parish, Louisiana.
- The Bayou Galion solar project has a capacity of 98 MWac, or 127 MWdc, and was expected to be operational by September 2024, with Primoris Renewables Energy as the engineering, procurement and construction contractor.
- Microsoft has agreed to purchase 100 percent of the energy and renewable energy credits produced by Bayou Galion, an agreement announced alongside the financing and recorded by Enerdatics at 127 MW.
- In May 2022 the Louisiana Public Service Commission approved a 20-year power purchase agreement between Recurrent Energy and 1803 Electric Cooperative covering the 98 MWac Bayou Galion project.
- Enerdatics records ten construction loans for named utility-scale US solar projects in the first half of 2024, with a median of $266.5 million; MUFG took part in five of them, including Bayou Galion.
Why does one solar farm carry two offtake contracts?
An offtake contract, or power purchase agreement, is the promise from a buyer to take a project's output at an agreed price for a set number of years. Lenders care about it more than anything else, because it is what turns a solar farm into a predictable stream of cash.
Bayou Galion has two. The first, approved by the Louisiana Public Service Commission in May 2022, links the project to 1803 Electric Cooperative for 20 years. Leap records it at 98 MWac and notes that Bayou Galion sits inside 1803's wider 343 MWac solar portfolio, which supplies five Louisiana rural electric cooperatives.
The second arrived with the financing. Microsoft will buy all of the project's energy and its renewable energy credits, the certificates that let a buyer claim the green attributes of the power. Leap's Microsoft record states plainly that the project also sells its output to 1803 under the 2022 contract.
The public record does not set out how energy and certificates are split between the two buyers, or whether one contract was restructured to make room for the other. Leap records both, and a reader should not assume a conflict where the documents may simply describe different layers of the same deal. What can be said is that MUFG lent against whatever structure resolves them.
What did MUFG's $160 million pay for?
Construction first, then operation. The loan funds the build of a 98 MWac plant that Recurrent began developing in 2018. Construction started in December 2023 and was due to finish in the autumn of 2024, so the money arrived with the project already underway.
The two capacity numbers matter here. MWac is the output the plant can send to the grid through its inverters. MWdc is the combined rating of the panels, which is usually higher because developers oversize the panel field to keep the inverters busy for more of the day. Measured against the 98 MWac grid connection, the loan works out at about $1.63 million per MW. Measured against the 127 MWdc of panels, it is about $1.26 million per MW.
Recurrent will own and operate the plant once it is built. That makes Bayou Galion an example of the build and hold model Canadian Solar's development arm runs alongside its sales of projects to third parties.
Why does a Louisiana project matter to Microsoft?
Because it adds new supply in a state with very little of it. Leap's Microsoft record notes that Louisiana had 145 MW of operating wind, solar and energy storage capacity when the agreement was announced. A single 98 MWac project is a large addition on that base.
For Microsoft the agreement supports its target to be carbon negative by 2030. Buying into a thin market is part of that logic for corporate buyers. A contract that brings new capacity onto a grid with little renewable supply is easier to defend as additional than one that buys output from a region already full of solar.
Where does Bayou Galion sit among US solar construction loans?
Below the middle on size, close to it on intensity. Enerdatics records 59 US solar debt financings announced in the first half of 2024, many of them small community and commercial loans. Ten are construction loans for named utility-scale projects, from Origis Energy's $136 million for Rice Creek up to Primergy's $588 million for the 408 MW Ash Creek project.
Enerdatics' data shows a median of $266.5 million across those ten loans, with Bayou Galion the third smallest at $160 million. On intensity it looks ordinary. Ash Creek's loan works out at about $1.44 million per MW, between Bayou Galion's AC and DC figures. MUFG appears in five of the ten, as the sole lender at Rice Creek and Bayou Galion and inside larger syndicates at Ash Creek, Pleasant Valley and Oriana.
What does the deal signal for US solar finance?
Lenders are comfortable with mid-sized single-project loans where one bank can carry the whole ticket. At $136 million and $160 million, Rice Creek and Bayou Galion were each financed by MUFG alone, while the projects above $240 million drew syndicates of three to nine banks.
It also points to a market where offtake arrangements are layered rather than simple. Bayou Galion links a utility cooperative contract approved in 2022 to a technology buyer that signed on in 2024, and both are recorded against the same asset. That is the kind of structure readers of Recurrent's other deals will recognise. Its developer has also raised $260 million for its Blue Moon project in Kentucky, and Leap records BlackRock's $500 million investment for a fifth of Recurrent Energy just two weeks before the Bayou Galion loan.
What the public record leaves unanswered is the division of Bayou Galion's output between its two buyers. Anyone pricing similar contracted projects should ask that question first.
Frequently asked questions
Who financed the Bayou Galion solar project? Mitsubishi UFJ Financial Group (MUFG) provided $160 million of debt to Recurrent Energy for the construction and operation of the Bayou Galion solar project in Louisiana, announced on 6 February 2024.
Who buys the power from Bayou Galion? Microsoft agreed in 2024 to buy 100 percent of the project's energy and renewable energy credits. Leap also records a 20-year power purchase agreement with 1803 Electric Cooperative, approved by Louisiana's regulator in May 2022.
How large is the Bayou Galion solar project? Bayou Galion has a capacity of 98 MWac, or 127 MWdc, and is located in Morehouse Parish in northeast Louisiana.
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