The companies will each invest $102 million in the 1,550- megawatt Alta Wind Energy Center being developed by Terra-Gen Power LLC, an affiliate of ArcLight Capital Partners LLC and Global Infrastructure Partners, they said today in a statement. That’s in addition to $55 million each that the companies agreed in May to provide to the project in Tehachapi.
The funding gives Google and Citigroup a source of long- term revenue that’s “better than Treasuries,” said Amy Grace, North American wind analyst for Bloomberg New Energy Finance in New York. When complete, the California wind farm will be bigger than rival operations in Oregon and Texas.
Wind farms are “a very stable way to invest and get a good return,” Grace said today in an interview. Google and Citigroup “have the capital. They need to make it work.”
The wind farm is being built in stages. The first five stages have a capacity of 720 megawatts and are complete, with 300 more megawatts expected to go into operation this year.
Citigroup and Google will now fund the fifth stage with today’s investment. Their prior support was for the fourth. Both investments are leveraged leases in which the backers purchase the projects as they go into service and lease them back to Terra-Gen, which will manage the operations.
The return on a straight equity investment in a wind project is typically about 10 percent, and a leveraged lease may be “in the mid-teens,” Grace said.
When complete, the Alta project will be the biggest wind farm in the U.S., Grace said, almost double the size of the 781.5-megawatt Roscoe Wind Farm currently in operation in Texas. It will also be larger than Caithness Energy LLC’s 845-megawatt Shepherds Flat wind farm in Oregon, a $2 billion project that’s expected to be complete next year. Google agreed in April to invest $100 million in Shepherds Flat.
The Alta Wind project will sell all of its electricity to Edison International (EIX) utility Southern California Edison Co.
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