Southern Power said Aug. 31 that it has added another major solar energy project to its growing renewable portfolio as it announced the purchase of the 200-MW Tranquillity Solar Facility in California from Recurrent Energy, a subsidiary of Canadian Solar.
One of North America’s largest solar developers, Recurrent Energy is constructing the facility and will retain the remaining interest in the project. Southern Power owns 51% and Recurrent Energy owns 49% of the project, according to a Southern spokesperson.
The project represents the first partnership between Southern Co. (NYSE:SO) subsidiary Southern Power and Recurrent Energy.
The project is expected to power approximately 55,000 homes when completed, helping California meet its ambitious carbon emission reduction goals.
The project is being constructed on 1,900 acres of land in Fresno County, California. Expected to create approximately 500 construction jobs, the facility will consist of more than 800,000 polycrystalline photovoltaic solar modules, mounted on tracking tables.
Construction began in July, with Signal Energy Constructors managing the engineering, procurement and construction of the facility. The project is expected to enter commercial operation in the fourth quarter of 2016.
The electricity and associated renewable energy credits generated by the facility will be sold under a 15-year power purchase agreement with Edison International (NYSE: EIX) utility Southern California Edison.
The project fits Southern Power’s business strategy of growing its wholesale business through the acquisition and construction of generating assets substantially covered by long-term contracts.
Canadian Solar (NASDAQ: CSIQ) noted in its own Aug. 31 statement under the terms of the agreement, Southern Power will acquire approximately 51% of the solar project. Canadian Solar will retain 49% ownership and contribute its share of the investment required to complete the construction of the project, which the company has fully financed through a construction and back-leveraged loan facility with a syndicate of six banks.
"The Tranquillity project is an attractive opportunity for investors, providing long term stable cash flows," said Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar. "This transaction is another example of solar power's move into the mainstream energy mix, and it shows our broader team's ability to attract top notch investors to finance our high-quality projects."
Recurrent Energy has more than 4 GW of solar projects in development in North America. Founded in 2001 in Canada, Canadian Solar is a leading manufacturer of solar photovoltaic modules and a provider of solar energy solutions. In the past 14 years, Canadian Solar has successfully deployed over 10 GW of premium quality modules in over 70 countries around the world.
With one of America’s most robust renewable generation portfolios, Southern Power has announced, acquired or is constructing more than 1,300 MW of renewable ownership with 19 solar, wind and biomass projects, including six solar projects in California. This facility adds further diversity and reliability to the Southern Company system’s generation mix of nuclear, 21st century coal, natural gas, renewables and energy efficiency.
The California Public Utilities Commission at its March 12 meeting approved a resolution that allows cost recovery for the Tranquillity power deal with Southern California Edison. Under the 15-year Tranquillity PPA, Renewable Portfiolio Standard (RPS)-eligible generation will be purchased. Under this PPA, SCE is to begin purchasing generation beginning Dec. 1, 2019. The expected annual generation to be purchased is 555 gigaWatt-hours (GWh). This generation could count towards SCE’s RPS requirements in Compliance Period 2017-2020.