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Spearmint secures US$92 million tax equity financing for 300MWh ERCOT BESS

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Battery storage developer and operator Spearmint Energy has closed a US$92 million tax equity investment into a battery storage project in the ERCOT, Texas market.

The investment was provided by Greenprint Capital, an investment firm specialising in renewable energy tax credit transactions.

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Greenprint has used the new investment tax credit (ITC) for standalone energy storage to invest in the 150MW/300MWh Revolution battery energy storage system (BESS), one of three equally sized projects Spearmint is developing in ERCOT.

ERCOT is the grid operator for the majority of Texas, and its BESS capacity is growing fast and could even overtake the current largest market California in the next year.

Revolution has already been built and is expected to begin operations later this year, Spearmint said. Inverter and BESS supplier Sungrow provided the BESS technology while engineering, procurement and construction (EPC) firm Mortensen built it.

Tax equity investments allow investors to provide equity capital for a project and receive tax credits in return to reduce their tax liabilities at the end of the financial year.

This year has seen two major changes to tax equity investing for renewables in the US. The first is that the ITC was made available for standalone energy storage having previously only been for renewable generation.

The second is that new transferability provisions means tax credits can be bought and sold, paving the way for investors less familiar with the investment mechanism to enter the space. Prior to transferability, investments required setting up a tax equity joint venture structure, a long and expensive process.

New tax credit transaction platform Evergrow recently claimed to be the first to use the new transferability provision to complete a transaction, for a small-scale solar PV array.

Spearmint said Greenprint’s investment in Revolution is one of the first applications of the standalone ITC. Other uses of it reported on by Energy-Storage.news in 2023 include investments into large-scale projects from Plus Power, SMT Energy and SUSI, Strata Clean Energy and Eolian, the latter of which claimed the very first use of it back in February.

Greenprint Capital provided the undisclosed tax equity investment into SMT Energy and SUSI’s projects, also in ERCOT, in August while also providing US$10.8 million in tax equity financing to Nexus Renewables for its BESS pipeline in ERCOT and California, in June.

Spearmint Energy recently contributed a guest blog to Energy-Storage.news on the topic of artificial intelligence (AI) enabled third-party BESS optimisation and the considerations for operators when deciding how to use it.

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