On.Energy, a proven end-to-end integrator of battery energy storage and Independent Power Producer (IPP), has closed both a construction facility totaling more than $40 million and permanent debt facilities for an 80 megawatt-hour (MWh) portfolio in Texas (the Palo Verde Projects) with financing provided by Live Oak Bank. The projects, set to come online in Q3 of 2024, will support the balancing of the ERCOT grid by providing both ancillary services as well as arbitrage.
This project also integrates an investment tax credit (ITC) transfer – among the first of its kind for merchant battery storage projects. The portfolio includes both greenfield development sites as well as projects acquired through M&A in mid-2023. The company continues to advance a pipeline of over 1GWh of utility-scale energy storage systems across ERCOT, CAISO, and beyond, with a follow-on portfolio of projects of 160MWh expected to begin operation by Q3 2025.
“On.Energy has closed a capital solution for our assets at a time when many are still trying to sort out the Inflation Reduction Act and its implications,” said On.Energy CFO David Fernandes. “The structure underpinning the Palo Verde Portfolio establishes On.Energy as a serious player in the ESS space with an emerging financial capability to match our renowned technical credentials.”
Live Oak Bank, a specialized lender providing energy transition capital to battery storage projects across the country, is providing construction debt followed by long-term debt financing under the USDA Business & Industry loan guarantee program. “Live Oak is excited to partner with On.Energy and to support energy projects that bring good jobs, carbon reduction, and electricity savings to Texas,” said Kevin Rooney, loan officer for Live Oak’s energy and infrastructure emerging markets team.
On.Energy President of North America Salvatore Minopoli added, “We are honored and excited to be working with Live Oak Bank. Their continued support will be invaluable as the company moves to larger capital asset investments across the U.S. in 2024 and 2025.” Wilson Sonsini served as On.Energy’s counsel for the transaction.