Debt Rating for Genesis Parabolic Trough Solar Project

Fitch to Rate Genesis Solar, LLC’s Non-guaranteed Debt at ‘A-’; Neg and Guaranteed Debt at ‘AAA’

The Genesis Solar Project consists of two 125-MW (net) parabolic trough solar fields and corresponding power blocks. The project is located in Sonoran Desert, near Blythe, CA and is to be connected to the Southern California Edison (SCE) and California Independent System Operator (CAISO) grid at the new Colorado River 220-kV substation via a new 220/500-kV transformer to be constructed (Colorado River 500-kV substation). The substation interconnects with the existing Devers to PaloVerde I 500-kV line and the future Devers to PaloVerde II line.

The Project is based on a conventional Rankine power cycle with a reheat steam turbine generator design using solar radiation from parabolic trough technology. The project will employ two independently operated 140-MW (gross) power blocks that are fed thermal energy from independent solar collection systems consisting of 230 loops each. A natural gas heating system will be used for freeze protection of the heat transfer fluid.

Fitch Ratings expects to rate Genesis Solar, LLC’s $561.6 million Series A Trust Certificates and $120 million Floating Rate Bank Facility (guaranteed) and $140.4 million Series B Trust Certificates and Floating-Rate Bank Facility (non-guaranteed) at ‘AAA’ and ‘A-’, respectively. The rating of the non-guaranteed debt is tied to that of the offtaker, PG&E (‘A-’; Negative Outlook by Fitch).The rating of the guaranteed debt is linked to the U.S. Sovereign rating (‘AAA’; Stable Outlook).

Key Rating Drivers

–Stable cash flow stream anchored by a strong, long-term, fixed price PPA with a highly rated utility, PG&E coupled with the resiliency of the project cash flow to severe operational stresses. Rating likely capped at this level and would fluctuate downwards with PG&E’s rating;

–Strong completion arrangement with contractors experienced in the design and execution of solar projects, especially in trough technology. NextEra Energy Capital Holdings (‘A-’; Stable Outlook) provides completion guaranty;

–Strong resource base and forecast based on significant datasets;

–Proven solar parabolic trough technology that has been extensively deployed and familiar to the sponsor;

–Substantial financial coverage cushion as demonstrated by a rating case average debt service coverage ratio (DSCR) of 2.52 times (x), due largely to the high level of equity and low leverage.

What Could Trigger a Rating Action

–Downgrade of the offtaker;

–Overstated resources projection;

–Underestimated operating costs.

Security

Collateral will include a first priority perfected security interest, which shall rank senior in priority of payment to any other debt of Genesis Solar, LLC in Genesis Solar Holdings, LLC’s equity interests in the Project and all existing and future tangible and intangible assets of the project.

Transaction Summary

Tags: parabolic trough, solar debt, solar finance, solar project, solar projects, solar radiation, southern california edison

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