West Texas is a hot spot for private equity underwriter (PEU) deals. Many are energy related. With solar and wind generation facilities weather dependent, the latest trend is battery storage.
Tom Green County has an Apex Clean Energy solar site that added battery storage. In January 2023 Apex's press release stated:
Apex Clean Energy today announced an environmental attribute purchase agreement (EAPA) with Meta for the full capacity of Angelo Solar in Tom Green County, Texas. The 195 MW project will help Meta support its regional operations with 100% renewable energy.Ares Management acquired a majority stake in Apex in 2021.
In early 2024 another firm bought into the project"
Chamber of Commerce Vice President of Economic Development Michael Looney cited the Angelo Solar project before the Tom Green County Commissioners Court in late April, as he spoke on behalf of the next battery farm. Great Bay renewables (“Great Bay”) today announced it has entered into a $30 million royalty investment with Apex Clean Energy (“Apex”) related to Apex’s 195 MWac Angelo Solar project in Tom Green County, Texas (“Angelo”), which is anticipated to achieve commercial operations in May 2024.
Apex is an established industry leader in origination, commercialization, construction, and operation of utility-scale renewable energy projects, with one of the largest portfolios of renewable resources in the nation.
The full capacity of Angelo will be sold to Meta under an environmental attribute purchase agreement. The royalty investment has been structured using royalty rates that vary over time and achieve Great Bay’s investment hurdles.
The Peregrine Energy project is in North San Angelo and is known as Zeppelin Energy Storage LLC.
Concho Valley Homepage reported on the Commissioners' Court meeting:
“It’s a storage facility, and they use different yields and different graphs to know exactly when the peak hours for energy usage are, and they deploy that from the battery storage,” said Tom Green County Judge Lane Carter. They’re selling a commodity that they take off the grid when there’s not as much usage and deploy it when there is high usage.”
County officials approved a $250 million project in March but that dropped to $160 million in April.
Both Tom Green County and the City of San Angelo paved the way for massive tax abatement on Peregrine's investment, even though the project provides virtually no permanent jobs.
City Council last acted on the Zeppelin project on September 17, 2024.
Peregrine started in 2022 as a partnership with PEU Castlelake. Since then it's done deals with IMM Investment Global, AB Carval and most recently with KKR.
Chamber VP Michael Looney spoke to the Development Corporation Board last week. He said:
"We aim to engage primary job creating businesses"
Giving significant county and city tax breaks to Peregrine's Zeppelin project does not fit with creating primary jobs. I'm sure it helps Peregrine and its various private equity financiers cross their hurdle rate. I don't see how it helps employment, a primary aim for both the Development Corporation and its Chamber of Commerce vendor.
Looney talked about private investment and raised the Chamber's working with private equity.
This is the use and parlaying of private investment, private equity, on the projects we have in process or those that we are aspiring to have in process. This serves as an accoutrement to half cent sales tax dollars. We're finding that private equity is very hungry for positions within tertiary markets, like San Angelo, and oftentimes they don't necessarily want to share any market positions with municipalities, which is not necessarily a bad thing.
VP Looney noted:
We are well into discussions with the development of speculative buildings within the Business Park. That goes along with several private equity investment companies we are working with.
His "value proposition" close included:
Access to private equity relationships
In sum, the PEU boys want economic subsidies and tax breaks, but don't want to disclose their stake in deals or reveal their fees, profit expectations and/or expected time frame for flipping the project. Everything is a PEU trade secret, which is in direct contrast to open government.
Local elected officials asked no questions at Tom Green County Commissioners' Court. City Council approved the item under a Consent Agenda vote, thus no discussion. That's the way the greed and leverage boys like it.
Update 11-5-24: My wise friend wrote:
"Deals like these basically furnish the private equity and big business interests with tax abatements for no jobs and as a plus the tax base of the area gets pushed on the people again."City Council met today and voted to reduce the retiree health benefit by adding a $500 deductible and a $250 charge for outpatient surgery. Many retirees get less than $500 a month from their public pension while others get between $500 and $1,000. The current Police Chief suggested a fund be established to help those retirees who cannot meet the new financial burdens imposed.
Not one person mentioned the 85% tax abatement recently granted to a PEU battery storage project that likely needed to be within city limits (fire protection) for insurance purposes.'
Update 11-20-24: Blackstone invested $500 million in Lancium and got an equity stake. How big? It was not shared in the article. As for their West Texas sites they include Fort Stockton, Abilene, Childress and five other unnamed sites. A Lancium employment ad mentioned one week a month travel to North Texas for a site selection position.
