The affirmation of
KEY RATING DRIVERS
--Stable Revenue Stream: The rating is anchored by stable revenues from a strong, long-term, fixed-price, power purchase agreement (PPA) with an investment grade utility, Pacific Gas & Electric Company (PG&E rated 'BBB+' with a Stable Outlook by Fitch). The PPA extends 13 months past the
--Adequate Solar Resource: Fitch's rating case uses one-year P90 solar resource estimates based on 13 months of ground-based data correlated with long-term satellite data. The revised resource assessment accounts for long-term uncertainty; however, Fitch has applied an additional 2% haircut to generation to account for reduced output or availability. In accordance with Fitch's criteria for investment grade solar projects,
--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)
--DOE Guarantee for 80% of the Issued Debt: The guaranteed series A certificates and floating-rate bank term loan benefit from a guarantee from the
--Sufficient Liquidity and Structural Support: The
--Investment Grade Financial Coverage: Under Fitch's base case, which incorporates P50 generation, 2% generation reduction, floating interest rate stress and inflation of 1.50%, Opco DSCRs average 2.84x with a minimum of 2.22x. Under Fitch's rating case which incorporates P90 generation and increased costs, Opco DSCRs average 2.42x with a minimum of 1.94x.
--Comparable to Peers: The
--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 the issuance of subordinate Holdco debt as credit neutral for the
As part of the Holdco debt issuance, updated solar resource assessments and operation and maintenance (O&M) forecasts were provided which impact cash flow available to service
The Project reached COD under both PPAs in
Pursuant to the construction completion agreement with NextEra Energy Capital Holdings and following the declaration of COD under the agreement on
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 - Effective
Source: Fitch Ratings
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