Northern Indiana Public Service Co. is seeking regulatory approval to indirectly purchase and acquire the 250-MW Fairbanks Solar Facility in Sullivan County, Ind., as part of a joint venture.
The NiSource Inc. subsidiary filed a petition March 3 with the Indiana Utility Regulatory Commission (Cause No. 45511) seeking authorization for the joint venture to purchase 100% of the equity interest in the planned solar plant from Fairbanks Solar Energy Center LLC. The solar plant is in early development and is being built by Fairbanks Solar Energy Center, a wholly owned subsidiary of Invenergy LLC subsidiary Invenergy Solar Development LLC, according to S&P Global Market Intelligence data and regulatory filings.
Once construction is complete and all conditions under a build-transfer agreement are met, the joint venture will be owned by a tax equity partner or financial investor "not responsible for project operations" and NIPSCO, the utility said.
The joint venture will pay cash for the Fairbanks solar project upon mechanical completion.
"For its share, [tax equity partner] will invest a percentage of the amount needed to pay joint venture's obligation under the [build-transfer agreement], including purchase of the Fairbanks project," NIPSCO wrote in the petition. "NIPSCO will invest the remaining amount needed under the [build-transfer agreement] in return for its share of joint venture. [Tax equity partner's] interest in joint venture will enable it to receive investment tax credits and tax losses generated by the Fairbanks project along with distributions of some of the cash available for distribution generated by the Fairbanks project, with the remainder flowing to NIPSCO."
NIPSCO noted that it will eventually have the option to acquire the tax equity partner's interest in the project at fair market value.
"By structuring the transaction in this fashion, the investment tax credits and tax operating losses will flow to [tax equity partner], thus efficiently monetizing those benefits and ultimately resulting in a lower cost to NIPSCO's customers," the utility wrote.
The Fairbanks Solar Facility is expected to reach commercial operation by Sept. 30, 2023, according to the petition.
Under the build-transfer agreement, NIPSCO will purchase 100% of the facility's energy output for 15 years beginning on the commercial operation date.
If the joint venture petition and related cost recovery is not approved, NIPSCO also entered into a separate backstop 15-year power purchase agreement with the Fairbanks Solar Facility, which is higher per megawatt-hour than the proposed agreement.
NIPSCO will also seek approval from the Federal Energy Regulatory Commission for the joint venture structure.
NiSource executives recently told investors that the company plans to add $1.8 billion to $2 billion in renewable energy investments to rate base by the end of 2023 as the company transitions its generation fleet.
The company will pursue about $1 billion in tax equity partnerships through 2023 as it pursues a mix of joint ventures and power purchase agreements to replace retired coal capacity.
