Wells Fargo Surpasses $10 billion in Tax-Equity Financing of Renewable Energy Projects
As one of the U.S.’s leading clean energy investors, Wells Fargo Renewable Energy & Environmental Finance, or REEF, provides tax-equity financing to utility-scale projects in the wind, solar, and fuel cell sectors. Launched in 2006 — and part of the company’s broader commitment to help accelerate the just transition to a lower-carbon economy — REEF has now provided more than $10 billion in tax-equity financing in support of more than 500 renewable energy projects across the company.
“Wells Fargo believes that climate change is one of the most urgent environmental and social issues of our time,” said Philip Hopkins, head of REEF. “We are committed to leveraging our expertise and market position to deploy capital and advance a low-carbon future through renewable energy development".
Specifically, Hopkins’ REEF group provides a specialized form of financing known as tax-equity, in which the bank becomes an owner in utility-scale clean energy projects.
“Here in the U.S., wind and solar energy projects are incentivized through the use of tax credits, but most of our customers are not large U.S. tax payers and therefore unable to use those tax credits themselves,” said Hopkins. “When we invest with our customer, we become an owner of those projects and eligible for those credits, which we are able to use for the customer. So, not only do we provide capital — we provide tax capacity, or the ability to monetize those credits, too.
By investing more than $10 billion in the renewable energy sector, Wells Fargo has helped more than 500 projects secure the capital they need to create a low-carbon future. In fact, the projects in which Wells Fargo has invested represent 12% of all utility-scale wind and solar energy generation (by megawatt) in the U.S
In 2020, Wells Fargo’s REEF group provided approximately $2.4 billion of tax-equity to the renewable energy industry, an increase of nearly $1 billion over 2019.
Recent projects include REEF’s $350 million tax-equity commitment to AES Clean Energy, one of the top renewables growth platforms in the country that owns and operates more than 2.6 gigawatts of renewable generation across the U.S. The financing supports the construction and development of AES’s Spotsylvania Solar Energy Center in Virginia. Once completed, the center will represent the largest U.S. solar project east of the Rocky Mountains.
Wells Fargo’s REEF group also recently made a $128 million investment in Ørsted’s 227-megawatt Muscle Shoals project, which will be the largest solar project in the state of Alabama upon completion. In its first 20 years of operation, the project is expected to deliver more than $15 million in incremental property taxes, much of which will be directed to education.
The benefits from clean energy extend even beyond the positive environmental effects. According to the International Energy Agency’s World Energy Outlook 2020, when implemented at optimum locations with the right policy support and financing, solar power is “the cheapest source of electricity in history.” The report also says the combination of wind and solar is expected to overtake coal as the world’s largest source of power by 2025.
“Wells Fargo believes that significant reductions in greenhouse gas emissions are needed to prevent the worst climate-related impacts,” noted Hopkins. “By continuing to deploy capital and invest in the expansion of renewable energy projects, Wells Fargo is helping to combat climate change and put into place the clean energy technologies that will lead us into the future.”
In 2018, Wells Fargo announced a commitment to lend or invest $200 billion to environmentally sustainable businesses and projects by 2030, with 50% focused on transactions that directly support the transition to a low-carbon economy, including renewables, energy-efficiency technologies, green buildings, green bonds, and low-emission vehicles.