Pattern Energy has secured an $11.05 billion financing package for SunZia, a 3.515 GW wind farm in New Mexico and the transmission line that will carry its power west. Twenty-two lenders and financial institutions are named on it. Set against every other US wind financing of $1 billion or more that Enerdatics records since 2022, the size gap is hard to overstate. The structure underneath the headline explains part of it.
Key takeaways
- Pattern Energy announced on 27 December 2023 an $11.05 billion financing package from a consortium of banks for the SunZia wind and transmission projects in the US.
- SunZia's $11.05 billion package comprises an $8.8 billion construction and term facility and a $2.25 billion tax equity term loan facility.
- The financing funds construction of the 3.515 GW SunZia Wind project across Torrance, Lincoln and San Miguel Counties in New Mexico and the 550-mile, plus or minus 525 kV SunZia Transmission line to south-central Arizona, which can carry 3 GW.
- SunZia Wind began construction in 2023 and is expected to start commercial operations in 2026, with long-term PPAs signed in 2023 with Shell Energy North America, the Regents of the University of California, Peninsula Clean Energy, Clean Power Alliance, Central Coast Community Energy and Silicon Valley Clean Energy.
- Enerdatics records six US wind financings of $1 billion or more announced from 2022 to 2024; SunZia's $11.05 billion is larger than the other five combined, which total $6.8 billion.
What sits inside the $8.8 billion construction and term facility?
Several instruments that do different jobs at different stages of the project. The facility combines an integrated construction loan and letter of credit facility, two separate term facilities, an operating-phase letter of credit facility and a holding company loan facility.
A construction loan funds the build and is usually converted or refinanced once the asset operates. A term facility is the long-dated debt that remains in place after commercial operation and is repaid from revenue. A letter of credit facility is not cash lent to the project. It is a bank guarantee that the project can post to counterparties, such as offtakers or grid operators, as security for its obligations, an instrument explained in more detail in Enerdatics' analysis of First Solar's credit facility.
That mix matters for reading the headline. A portion of the $11.05 billion is guarantee capacity, and a portion replaces other portions over time as the project moves from construction to operation. The total describes the full set of commitments, not a single cash advance.
Why does a wind project need a tax equity term loan?
Because the project's tax benefits are worth money before anyone can use them. In US renewables, tax equity is investment from a party that can use a project's federal tax credits, in exchange for a share of those benefits. A tax equity term loan, sometimes called a bridge, advances cash against the tax equity that will be funded later, usually at or after commercial operation.
At $2.25 billion, the tax equity term loan alone exceeds every other US wind financing in Enerdatics' $1 billion-plus list. Milbank represented the lenders on that facility, a separate counsel from Norton Rose Fulbright, which acted for the senior and holding company lenders. Skadden served as borrower counsel to Pattern Energy.
How does SunZia's financing compare with other US wind deals?
It is in a category of its own. Ranked by amount, Enerdatics records six US wind financings of $1 billion or more announced from the start of 2022 to the end of 2024:
- Pattern Energy, SunZia wind and transmission, $11.05 billion debt, December 2023.
- HASI, upsized credit facility, $1.825 billion debt, April 2024.
- Invenergy, revolving credit facility, $1.5 billion debt, August 2023.
- Invenergy, four projects financed by Natixis CIB, $1.27 billion debt, March 2024.
- Copenhagen Infrastructure Partners and Avangrid, Vineyard Wind 1, $1.2 billion tax equity, October 2023.
- Invenergy, equity from Blackstone Infrastructure Partners, $1 billion, June 2023.
Enerdatics' data shows the five financings below SunZia total $6.8 billion, so SunZia's package is about 1.6 times the rest of the list combined. It is also about six times the second-largest entry. Only one of the six finances a single named onshore wind development, and that one is SunZia. The others are corporate facilities, multi-project packages, equity or offshore wind tax equity.
A per-MW figure needs care. Spread across the 3.515 GW wind farm alone, $11.05 billion is about $3.1 million per MW. That overstates the cost of the wind farm, because the package also funds a 550-mile high-voltage line. SunZia is a generation project and a transmission project financed as one.
What does the deal signal for US wind financing?
It signals that lenders will finance very large onshore wind if the transmission and the offtake are solved in the same package. SunZia's power is contracted through long-term PPAs signed across 2023, including 220 MW for Peninsula Clean Energy over 15 years and 575 MW for Clean Power Alliance. The transmission line carries that output from central New Mexico to south-central Arizona. The financing was secured only after the main offtake contracts had been signed.
The size of the lender group is part of the same signal. No single bank holds an $11 billion exposure comfortably. The package names joint coordinating lead arrangers, joint lead arrangers, co-syndication agents, an administrative agent and a collateral agent. MUFG is administrative agent, Deutsche Bank Trust and Agency Services is collateral and deposit agent, and Banco Santander and Santander Bank are joint coordinating lead arrangers. Bank of America, GE Vernova's Financial Services, Natixis Corporate & Investment Banking and Royal Bank of Canada are joint lead arrangers, while BNP Paribas, Credit Agricole CIB, MUFG, Societe Generale and Sumitomo Mitsui Banking Corporation acted as co-syndication agents. Spreading the roles this widely is how a single project reaches a debt package of this size.
The project's history also shows how long this kind of asset takes. Pattern Energy acquired the Mesa Canyons wind farm from Clean Line Energy Partners in May 2018, construction started in 2023 and commercial operation is expected in 2026. Lenders are financing the last few years of a development cycle that runs close to a decade.
Ownership is the last piece. The financing was approved three years after Canada Pension Plan Investment Board bought Pattern Energy. Nomura Securities International and CPPIB Credit Investments took part in the final piece of the financing to support initial equity capital for the project. A deep-pocketed sponsor gives lenders confidence that equity will be there when needed.
Frequently asked questions
How much financing did Pattern Energy raise for SunZia?Pattern Energy secured $11.05 billion: an $8.8 billion construction and term facility and a $2.25 billion tax equity term loan facility, announced on 27 December 2023.
What does the SunZia financing pay for?Construction of the 3.515 GW SunZia Wind project in New Mexico and the 550-mile SunZia Transmission line to south-central Arizona, which can carry 3 GW of power.
When will SunZia Wind start operating?Construction began in 2023, and the wind farm is expected to begin commercial operations in 2026.
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