Renewable Energy Finance: Hecate Energy secures $550mn credit financing package to expand its solar and storage projects pipeline in the US

The five-year package includes a $250mn term loan and a $300mn letter of credit facility. Investec and Nomura Securities International led the financing, along with the National Bank of Canada, Deutsche Bank, and Generate Capital as the initial coordinating lead arrangers and syndication agents. Additionally, ten lenders participated in the primary syndication of this financing. The new credit facilities will be solely collateralized by Hecate Energy’s pipeline of renewable energy development projects and its minority ownership interests in Hecate Grid, without a guarantee or any other credit support. 

The proceeds from the term loan will be used to refinance an existing loan facility at a lower cost to Hecate, while the credit facility will be used for the development of the company's pipeline. Hecate will issue numerous grid interconnections for their ~35 GW pipeline of solar and battery storage development projects across southern and eastern states in the US. The company will also start selling the output from the projects with off-takers under long-term power purchase agreements (PPAs), with the aim to contract 5 GW or more, annually. Hecate has previously signed PPAs with major corporate and utility off-takers including Google, Avangrid, John Hopkins University, and Southern California Edison. The financing marks Hecate’s first major transaction since European O&G major Repsol acquired a 40% stake in the company in Jun '21.

Since 2021, European O&G majors have been consolidating their holdings in the US’s onshore renewables space, driven by the need to grow their portfolios inorganically to achieve their ambitious renewables targets. Repsol entered the US market with its investment in Hecate Energy, as seeks to leverage the company’s massive development pipeline to reach its goal of installing 7.5 capacity GW by 2025, and 15 GW by 2030, globally. TotalEnergies has also made similar moves in 2022, acquiring distributed generation developer SunPower in February, as well as stakes in large-scale solar and wind developer Clearway Energy Group and Core Solar in May. Meanwhile, Silicon Ranch - a solar PV developer in which Shell is the largest shareholder - recently secured $600mn of equity funding, marking the raising of ~$1.1bn of equity capital by the company during 2022. Enerdatics believes that O&G majors see these investments as key enablers to developing a sizable renewable portfolio in the US, through independent clean power producers that function as subsidiaries, which helps them retain the structure of their existing business units and legacy operations.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.