KEY RATING DRIVERS
Robust Completion Agreement: Fitch views completion risk as low due to the advanced construction stage and construction completion agreement (CCA) between
Adequate Solar Resource: Fitch's rating case utilizes one-year P90 solar resource estimates based on extensive onsite data correlated with long term satellite data. Fitch has applied additional haircuts to account for solar resource forecast bias, consistent with Fitch's solar criteria. The project is able to cover debt service obligations at 1.97 times (x), on average, under a one-year P99 generation scenario. (Revenue Risk- Volume: Midrange)
Unproven Cost Profile: Genesis has yet to establish a stable cost profile due to lack of operating history. The project utilizes solar parabolic trough technology, largely similar to the Solar Energy Generating Systems (SEGS) technology, with which the sponsor has over 20 years of operating experience. The sponsor's familiarity with this technology helps to reduce operating risk and cost uncertainty. Further, Fitch has stressed operating costs at 10% in the rating case. (Operation Risk: Midrange)
Sufficient Liquidity and Structural Support: The guaranteed Series A Certificates and Floating-Rate Bank Term Loan benefit from a guarantee from the
Considerable Financial Coverage: The rating is supported by a sizable financial cushion in debt service coverage built into the financial structure. The increased level of coverage compared to peers is due to a high level of contributed equity and consequently low leverage on the transaction. Fitch rating case indicates an average debt service coverage ratio of 2.42x, significantly above the level to achieve investment grade.
--A rating downgrade of the U.S. sovereign rating, based on loan guarantees for 80% of the rated debt, would result in a commensurate downgrade of the project rating.
--Any rating downgrades of the parent, NextEra Energy Capital Holdings, Inc., based on construction guarantees, or the PPA provider, PGE, based on revenue contract reliability below the project rating would result in a commensurate downgrade of Genesis.
--Energy output or solar resource persistently below one-year P90 projections could result in a negative rating action.
--An increase to operating costs that exceeds 10% of the original projections could result in a downgrade, especially under a low production scenario.
Collateral for the debt includes all of the ownership interests in Genesis and a first priority security interest in all of the project assets and accounts.
Fitch views positively the Sponsor's management of a tight construction schedule following several delay events. Construction of the Project is 99% complete with a final completion date estimate in line with the original schedule. Unit 2 reached COD on
Units 1 and 2 swapped expected COD following the uncovering of cultural artifacts within the grading area of Unit 1. Unit 1 is on schedule to reach COD by
Construction costs are
Fitch views the risk associated with the 2013 involuntary Chapter 7 bankruptcy proceeding of the Project's mirror supplier, Flabeg US Solar, as substantially mitigated. All of the mirrors have been delivered to the site and installed on both units with roughly 3,000 spares in reserve to replace broken or defective mirrors. At present, there are no ongoing lawsuits between the Project and Flabeg.
Genesis is a total 250 MW parabolic trough solar project located in the Sonoran Desert,
The project is owned and operated by
Additional information is available at 'www.fitchratings.com'.
--'Rating Criteria for Infrastructure and Project Finance' (
--'Rating Criteria for Solar Power Projects' (
Rating Criteria for Infrastructure and Project Finance
Rating Criteria for Solar Power Projects
Source: Fitch Ratings
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