Alterra Power Corp. (TSX: AXY) and Inovateus Solar LLC on Oct. 11 announced the closing of an $8.9 million construction loan facility for the Kokomo solar project, an approximately 7-MW (dc) solar project located in Kokomo, Indiana.
The loan facility is supplied by 1st Source Bank, a subsidiary of 1st Source Corp. (NASDAQ: SRCE), and consists of an $8.9 million construction loan plus a $150,000 letter of credit. Concurrently with the construction loan closing, 1st Source is providing a $4.0 million tax equity investment commitment and a $5.0 million term loan takeout which will be used to repay the construction loan upon commencement of commercial operations (each subject to typical conditions precedent). The term loan will have a balloon payment based on a 10-year maturity and 18-year amortization. The term loan proceeds will be used to pay for the portion of remaining project costs not paid by the tax equity investment.
Separately, Alterra said it has completed its previously announced partnership agreement with Inovateus. Alterra will hold a majority interest of 75% or more in the project, though the final partnership allocations are subject to change under certain circumstances prior to term loan conversion.
The Kokomo solar project is currently under construction and is expected to begin commercial operations in December 2016. The project is contracted under a 20-year power purchase agreement with Duke Energy Indiana for 100% of plant output. Construction is being managed by Inovateus, which will also provide operations and maintenance services under a long-term contract. Alterra will manage and administer the project. The Kokomo solar project is located on a remediated Superfund parcel of city-owned land.
“Closing the financing for the Project marks another step toward bringing more renewable energy to Indiana and the greater Midwest region,” said T.J. Kanczuzewski, President of Inovateus. “We look forward to operating and maintaining the Project and the Michigan project now in development.”
Alterra and Inovateus are actively developing a second solar project, a 13-MW (dc) site located in Michigan, which is expected to enter construction in 2017. The Michigan project is contracted under a 25-year, investment-grade power purchase agreement.
“We’re pleased to complete the Kokomo financing on commercially favorable terms with 1st Source and Inovateus,” said Jon Schintler, VP of Project Finance at Alterra, “and we look forward to building the Michigan solar project next year. We look forward to advancing these relationships as we develop and build further projects together.”
Alterra Power is a renewable energy company, operating seven power plants totaling 819 MW of capacity, including British Columbia’s largest run-of-river hydro facility and largest wind farm, the recently-completed Shannon and Jimmie Creek projects, and two geothermal facilities in Iceland. Alterra owns a 381 MW share of this capacity.
Inovateus Solar is one of the leading solar EPC (engineering, procurement and construction) and supply companies in the Midwest United States. Headquartered in South Bend, Indiana, the company has developed and built more than 250 MW of utility, commercial and industrial, and microgrid solar systems in the U.S., the Caribbean and Latin America.