EnergySource closes US$400 million construction financing for Hudson Ranch in California

One of the geothermal plants at the Salton Sea, not directly related to story but close to the Hudson Ranch site (source:
Alexander Richter 14 May 2010

EnergySource (formerly CHAR, LLC) just closed the US$400 million construction financing for its Hudson Ranch I project in the Imperial County, California, which was arranged by Hannon Armstrong.

In another milestone event for geothermal development in the U.S., ThinkGeoEnergy is proud to be able to report that EnergySource (formerly CHAR, LLC) just closed the construction financing for its Hudson Ranch I project in the Imperial County, California.

CHAR, LLC has been a joint venture between Hannon Armstrong and Catalyst Renewables, who have developed this project in partnership over the years.

We believe it to be a US$400 million financing, arranged by Hannon Armstrong. We understand that the transaction has received strong support by all parties involved based on the strong fundamentals of the project and its drivers. Hudson Ranch developed its resource with the support of Glitnir Bank, the predecessor of Icelandic Íslandsbanki, which provided a specialized Resource Verification Loan to the project. US$90 million of equity was contributed by GeoGlobal Energy.  Salt River Project is the the project’s off taker.

“The Hudson Ranch I project is a 49.9 megawatt (MW) geothermal power generating facility under development within the Salton Sea Known Geothermal Resource Area in Imperial County, California. Hudson Ranch I is currently developing its resource. Its essential permit is in place and Hudson Ranch I has executed a long term power sales contract with a utility company. The project will utilize state of the art flash steam technology and will be operational in 2012.”

EnergySource is a joint company by Catalyst Renewables, an energy development  company based in Dallas, Texas, and Hannon Armstrong, a financial services firm that finances energy, water, and telecommunciations infrastructure assets.

This closing is in so far a milestone, as it provides hope for all the other projects that are currently in development in the U.S. and are trying to start construction by 31 December 2010 to qualify for the ITC tax grant funded by the US Treasury. To be eligible for the loan guarantee program by DOE, projects must commence construction by September 30, 2011.

The industry is seeing positive effects from the stimulus package, but still faces problems attracting investors and banks to cover the important drilling phase of geothermal project development.

In additional news reported from the Imperial Valley, ”

Congressman Bob Filner announced that Catalyst Renewables and their partners have completed financing and are ready to begin construction today on the Hudson Ranch 1 geothermal plant in Imperial County.

“This project is critical to economic development in Imperial County and I’m glad I could help make sure they got the funds they needed to move forward,” said Filner.  “Not only will this bring jobs to the region, it will serve as an example of how we can create energy without sacrificing the environment.”

Congressman Filner was successful in helping secure $105,000,000 in federal stimulus funds for the geothermal plant, which was essential to completing the financing for the project.

“This project is a perfect example of the results we can generate as a part of Project SOL. Through Project SOL I am working to increase collaboration between various levels of government and private industry to make Imperial Valley the renewable energy capital of the world,” said Filner.

According to Catalyst Renewables, construction will last 21 months and create 125 full time equivalent jobs with an estimated payroll of $21,145,000.  Power production operations are planned to begin by the end of 2011.  To operate the plant, 40 new jobs will be created, with another 10 full time jobs in El Centro.  The new entity will be named “EnergySource.”

Source: ThinkGeoEnergy and Imperial Valley News