Recurrent Energy, a subsidiary of Canadian Solar, has closed $513m in project finance for its energy storage project in Maricopa County, Arizona.

MUFG and Nord/LB served as coordinating lead arrangers.

The financial package comprises a $249m construction and term loan, a $163m tax equity bridge loan and a $101m letter of credit facility.

The transaction saw participation from joint lead arrangers Bank of America, CoBank, DNB, Rabobank, Siemens and Zions.

MUFG managing director Fred Zelaya stated: “MUFG is pleased to have supported Recurrent Energy on this important project, which will contribute to the transition to a low-carbon economy.

“This transaction showcases MUFG’s expertise and leadership in financing renewable energy and energy storage projects across the US and globally. We look forward to collaborating with Recurrent Energy on future developments.”

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The Papago Storage project, with a capacity of 1.2GWh, is scheduled to break ground in the third quarter of 2024 and commence commercial operations by the second quarter of 2025.

The project has secured a 20-year tolling agreement with the Arizona Public Service Company, ensuring its long-term viability and contribution to the local energy grid.

During the construction phase, the project will create 200 jobs, supporting the local economy.

The energy storage system will have the capacity to dispatch power, which will be sufficient to supply 244,000 homes for four hours each day.

Once operational, Recurrent Energy will maintain ownership and operation of the facility.

Recurrent Energy CEO Ismael Guerrero stated: “When we began developing Papago Storage in 2016, the Arizona storage market was in its infancy.

“Today, Arizona is one of the fastest-growing markets for energy storage in the United States, bolstered by the state’s expanding economy and cost-effective renewable energy resources.

“Today, we are thrilled to see nearly a decade of planning culminate in the financing of what will be the largest energy storage project in Arizona. We appreciate the continued support from our partners Nord/LB and MUFG in our shared mission to advance the clean energy transition.”