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The combined $29mm construction-to-permanent debt facility, $24mm transferability bridge loan, and $40mm tax equity commitment will support Pacifico's 27 MW solar + 25 MWh battery storage portfolio in California and Massachusetts.
Los Angeles, California, USA (June 26, 2024) – Pacifico Energy Group, through its United States-focused renewable power development, energy services and financing subsidiary, Pacifico Power LLC (together, “Pacifico"), has partnered with Sumitomo Corporation, through Sumitomo Corporation of Americas (collectively, “Sumitomo Corporation Group" or “SCOA"), to finance a portfolio of solar photovoltaic (PV) plus battery energy storage system (BESS) projects.
Pacifico secured $40 million in project tax equity funding from SCOA for a portfolio consisting of six projects totaling 27 MW of solar PV and 25 MWh of battery storage located in California and Massachusetts. The projects will provide customers with an estimated cost savings of more than $46 million over the course of the portfolio's useful lifetime, as well as support the ongoing transition to sustainable energy infrastructure.
SCOA will act as a tax equity partner, while Pacifico will remain a sponsor owner and operator of the projects through direct subsidiaries. This will be SCOA's first investment in distributed generation and signals the group's continued commitment to renewable energy resources across the United States. The projects were developed and constructed by Pacifico Power with commercial operation expected by year end 2024.
This innovative portfolio strategy includes a diverse combination of retail markets and private companies, the financing for which has historically been more difficult. The portfolio furthers Pacifico Power's goal to be a premier energy services provider for industrial customers turning to renewable-powered microgrid implementation for cost savings and energy independence from traditional utilities.
The two projects in Massachusetts, developed under the Solar Massachusetts Renewable Target (SMART) program, are community solar developments wherein over half of the energy produced will be dedicated to serving low-to-moderate income households. Community solar subscribers for the projects include both residential as well as commercial and industrial (C&I) customers. These projects provide access to the benefits of renewable energy for local subscribers, especially those without the ability to install onsite solar. The community solar market is expected to undergo continued growth and expand from its current size of 6 GW to an estimated 14 GW by 2028, reflecting 8% annual growth.
Additionally, the portfolio includes four behind-the-meter projects in California that are designed to support C&I customers by integrating renewable energy into corporate sustainability strategies, while also reducing energy costs and enhancing reliability. Each project provides tailored energy solutions through the efficient use of onsite solar paired with BESS under a long-term energy services agreement.
This follows the successful close of a $29 million deal with Mitsubishi UFJ Financial Group (“MUFG") for a construction-to-permanent debt facility and $24 million transferability bridge loan for the portfolio in January 2024 – for a total transaction value of $93 million in funding for the Pacifico Power projects. The transaction marks Pacifico's first to leverage the transferability provisions of the Inflation Reduction Act allowing monetization of the projects' investment tax credits, as well as one of the first such transactions in the industry.
“We're pleased to announce Pacifico's latest financing partnerships with Sumitomo and MUFG as we continue to accelerate deployment of clean energy infrastructure nationwide," stated Kevin Pratt, President of Pacifico Power. “As one of the first participants to close a transferability bridge loan under the IRA and a tax equity vehicle of this nature, we're excited to build on the momentum that Pacifico is experiencing within clean energy."
MUFG has been a long-term banking partner to Pacifico's operations in Asia, where the group helped finance Pacifico's first utility-scale project in Japan and ultimately the company's first distributed generation deal in the U.S.
“It's an honor to work with MUFG again on this opportunity, solidifying our ongoing partnership in renewables over the past decade," noted Nate Franklin, CEO of Pacifico Energy Group. “Pacifico and MUFG successfully executed MUFG's first non-recourse project financing transaction domestically in 2014, and we continue to innovate in the clean energy space, marked by the close of our first transferability bridge loan for this portfolio."
Meanwhile, SCOA's collaboration with Pacifico Power signifies its proactive approach to embracing a low-carbon future through critical support for the development of renewables and distributed generation, both in the U.S. and globally. By integrating solar PV with BESS, Sumitomo Corporation Group aims to continue to deliver on its commitment to reduce carbon emissions and enhance grid resiliency, while also fostering sustainable economic growth in local communities.
Through the knowledge gained as part of this investment, Sumitomo Corporation and Mitsubishi UFJ Financial Group will seek to identify further opportunities to expand the community solar business model in the U.S., Japan, and other countries in an effort to increase access to the immense benefits of renewable energy.
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About Pacifico Energy Group
Pacifico Energy Group is a privately held global investment holding company with operations in the United States, Japan, Vietnam, and Korea. Specializing in renewable energy, aviation, real estate, and private equity, Pacifico Energy Group aspires to be a major player in global markets, particularly those impacted by the energy transition. To date, the company has successfully raised over $5+ billion in debt and equity financing and has over 1.5 GW of renewable energy projects in construction or operation, with an additional 7 GW under development. Pacifico Energy Group's Japanese division is currently the largest solar developer in Japan and is continuing to expand its operations. Other successful renewable projects include offshore and onshore wind, as well as merchant utility-scale battery deployments. (www.pacificoenergy.com)
About Pacifico Power
Pacifico Power is Pacifico Energy Group's United States-focused subsidiary and is a dynamic renewable energy developer and energy services company, specializing in the development, financing, construction, and operation of distributed generation projects. With a focus on sustainability and innovation, Pacifico Power is at the forefront of the transition towards clean energy solutions, leveraging cutting-edge technology and strategic partnerships to deliver reliable, cost-effective, and environmentally friendly electricity generation. Backed by a team of experienced professionals and a track record of successful projects across various technologies and markets, Pacifico Power is committed to driving the transition to a low-carbon future while creating value for its stakeholders and contributing to the global fight against climate change. (www.pacificopower.com)
About Sumitomo Corporation
Sumitomo Corporation (TYO: 8053) is an integrated trading company with a strong global network comprising 129 offices in 66 countries and regions. The Sumitomo Corporation Group consists of approximately 900 companies and 80,000 employees on a consolidated basis. The Group's business activities are spread across the following nine groups: Steel, Automotive, Transportation & Construction Systems, Diverse Urban Development, Media & Digital, Lifestyle Business, Mineral Resources, Chemicals Solutions and Energy Transformation Business. Sumitomo Corporation is committed to creating greater value for society under the corporate message of "Enriching lives and the world," based on Sumitomo's business philosophy passed down for over 400 years. (www.sumitomocorp.com)
About Sumitomo Corporation of Americas
Sumitomo Corporation of Americas is the largest subsidiary of Sumitomo Corporation, a leading global trading company, with 108 locations in 65 countries and 20 locations in Japan. The entire Sumitomo Corporation Group consists of 900 companies and more than 80,000 personnel. The Sumitomo business is continuously expanding into a diverse range of products and services. As of December 31, 2023, Sumitomo had total assets of over $72 billion and cash-on-hand of over $4.26 billion. (www.sumitomocorp.com)
About Mitsubishi UFJ Financial Group
MUFG (Mitsubishi UFJ Financial Group) is one of the world's leading financial groups. Headquartered in Tokyo and with over 360 years of history, MUFG has a global network with over 2,100 locations in more than 40 markets including the Americas, Europe, the Middle East and Africa, Asia and Oceania. The Group has over 120,000 employees and offers services including commercial banking, trust banking, securities, credit cards, consumer finance, asset management, and leasing. Through close partnerships among our group companies, the Group aims to be the world's most trusted financial group, flexibly responding to all of the financial needs of its customers, serving society, and fostering shared and sustainable growth for a better world. MUFG's shares trade on the Tokyo, Nagoya, and New York stock exchanges. (www.mufg.jp)
