Fengate Asset Management and Alpha Omega Power have closed a tax equity commitment with US Bancorp Impact Finance for a 400MWh BESS project in California, acquired from Origis Energy.
The value of the tax equity deal has not been disclosed, but is for the Caballero Energy Storage Project in San Luis Obispo County, California, which will also be financed with construction and term debt from MUFG Bank. The project is expected to come online in early 2025.
It follows investment firm’s Fengate and Alpha’s acquisition of the 100MW/400MWh battery energy storage system (BESS) project from developer Origis. The pair formed the partnership in 2023 to develop, acquire and operate BESS projects, and this is their first investment. Fengate’s participation is via its Fengate Infrastructure Fund IV.
The 4-hour duration of the project is similar to most other grid-scale systems in California, largely down to that being a requirement for participation in Resource Adequacy, transmission system operator (TSO) CAISO’s framework for ensuring there is enough capacity without using centralised auctions.
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It has been the basis of the revenue stack in California for BESS and helped drive the market to be the US’ largest, with 10.5GW online today according to CAISO, as of October 2024.
The tax equity deal for the standalone Caballero BESS is possible thanks to the outgoing Biden-Harris administration’s Inflation Reduction Act (IRA), which extended the clean energy investment tax credit (ITC) to standalone storage for the first time. Other independent power producers (IPPs) Ormat and esVolta also recently secured tax equity deals for California BESS projects.
US Bancorp Impact Finance has been particularly busy as a tax equity investor in energy storage, this year doing deals for BESS projects in the US with IPPs Aypa Power in California, Texas and Idaho; Enlight in New Mexico; and Indian Energy, which is also in California.
