Duke Energy Carolinas has closed on $1 billion worth of “green bonds” the utility can use to finance solar projects it builds and other clean-energy investments it makes in the next several years. Much of the money is likely to fund construction and operation of solar farms that Duke purchases or runs through the competitive bidding process that started just this year in the Carolinas.
The funds can also be used for other clean-energy efforts, such as Duke’s plans to install hundreds of millions of dollars worth of battery storage in the Carolinas over the few years. But the money can also be used to pay for existing clean-energy projects. And it could also go toward financing power-purchase agreements Duke makes with renewable projects that it does not own and fund investments such as solar rebates the company is now offering to residential and commercial customers.
Chief Financial Officer Steve Young said the offering is a milestone that “demonstrates our continued commitment to generating cleaner energy for our customers and communities.” And he says it provides investors an opportunity to participate in Duke’s goal of reducing carbon emission 40% (from 2005 levels) by 2030.
“Similar to Duke Energy, investors are increasingly interested in clean and renewable energy and now we can partner together to transform our energy future in the Carolinas,” Young says.
Duke spokeswoman Catherine Butler says that Duke expects to use the bond funding mainly for project financing, although there are other possible uses. Duke Carolinas has issued the bonds now because of the pipeline of new clean-energy projects it expects as a result of the new competitive bids. There are no current plans to offer such bonds at Duke Energy Progress or Duke’s utilities in Florida and the Midwest.
“It is based on the financing needs of each utility,” Butler says.
Duke Energy Corp. is currently considering bids for about 680 megawatts of solar-power projects in the Carolinas that it will award next year. Duke Carolinas is expected to award 600 megawatts of that amount. Up to 30% of the projects could be those that the utility will own and operate itself.
There will be at least two more rounds of bidding for what could ultimately be 2,660 megawatts of new renewable projects, with about 2,400 megawatts being built in Duke Carolinas’ area. It is because of that pipeline of potential projects that Duke Carolinas has issued the bonds. Butler says it is unlikely that all of the bond money will go to finance projects awarded by competitive bids.
Other renewable-energy projects may be financed out of the bond proceeds, she says. And the bonds could also be used to pay for already-built projects, such as the 60-megawatt Monroe Solar project and 15-megawatt Mocksville Solar project, both built in 2016.
Duke offered the bonds in two tranches. One involves bonds that mature in three years, and the other matures in 10 years. Both closed on Thursday. Duke says the average weighted coupon yield is 3.74% for the two tranches.
Source Charlotte Business Journal