Follow the Money: How a Solar-Plus-Storage Project Actually Gets Financed

In June 2026, a developer called Enlight reached financial close on a cluster of five solar-and-storage projects in Arizona known as CO Bar. The complex pairs roughly 1.2 gigawatts of solar with about 4 gigawatt-hours of battery storage, and it costs somewhere between $2.9 and $3.05 billion to build (Energy-Storage.news, 2026). The part worth pausing on is the timing. The project won’t sell a single kilowatt-hour until the second half of 2027, so someone must fund three billion dollars of steel, silicon, and lithium before the meter ever starts spinning. 

Where does that money come from? Not one check, and not one investor. A utility-scale clean energy project is financed through a capital stack, which is just a set of layered claims on the same project. Each layer has a different tolerance for risk, a different required return, and a different moment when it shows up. Learn to read the stack and you can read almost any clean energy deal: why it can be financed at all, who earns what, and where the risk lands when a project underperforms. 

So, let’s follow the money. 

Four kinds of money, stacked 

Underneath the acronyms, most projects are built from four layers. The ones at the bottom get paid first and take the least risk. The ones at the top get paid last, and they charge more for the privilege. 

Sponsor equity sits at the foundation. This is the developer’s own capital, the money that pays for land, permitting, interconnection studies, and everything else a project needs before a bank will touch it. It is the first money in and the last to be repaid, so it absorbs the earliest losses when things go wrong. In return, the sponsor keeps the upside. The rest of the stack is arranged to shield the layers above the risk this layer is willing to swallow. 

Tax equity is the least intuitive layer in the stack, and it warrants the fuller treatment it receives below. Federal support for clean energy in the United States flows primarily through the tax code rather than through direct spending. The Investment Tax Credit can offset up to half of a project’s eligible cost once bonus adders for domestic content or sitting in a designated energy community are applied (Impact Capital Partners, 2025). Yet the value of such a credit is contingent on the holder having sufficient tax liability to absorb it, and developers seldom do. The credit is therefore monetized by transferring its benefit to an investor with the requisite tax appetite. At CO Bar, Enlight anticipates that tax equity will supply between $1.45 and $1.53 billion of the roughly $3 billion in project costs, or nearly half of the total capitalization (Energy-Storage.news, 2026). 

Senior debt is the cheapest and safest money in the stack, which is why there tends to be a lot of it. Banks lend to build the project and then to carry it through operations, secured by the project’s assets and by a long-term contract to sell its power. CO Bar’s debt runs to about $1.7 billion in term loans, arranged by a syndicate of seven global banks that includes BNP Paribas, Crédit Agricole, MUFG, Société Générale, and Wells Fargo, with commitments of around $2.6 billion (Construction Front, 2026). When one project draws seven of the world’s biggest lenders, that tells you how safe senior debt feels sitting at the bottom of the stack, first in line to be repaid out of contracted revenue. 

Mezzanine and preferred equity fill the space between senior debt and common equity. This money costs more than debt and less than sponsor equity, and what it buys is flexibility, a way to raise capital without giving up ownership or piling on more senior leverage. Public disclosures rarely break this layer out, which is what makes a recent Matrix Renewables portfolio useful to look at. Alongside more than $470 million of construction-to-term debt and a $400 million tax equity bridge loan, the deal carried a $210 million preferred equity investment from DESRI (Matrix Renewables, 2026). That preferred piece is the mezzanine layer made visible. 

Put the four together and you have funded the project. You have also built a machine for splitting up risk, because each layer’s return is simply the price of the risk it agreed to hold. 

The tax equity twist 

If one thing about clean energy finance trips people up, it is tax equity. Why would a project need a whole layer of capital whose job it is to absorb tax benefits? 

It comes down to a mismatch. A renewable project throws off two things the tax code rewards, the credits themselves and accelerated depreciation on the equipment. Both are valuable, but only to someone with a big enough tax bill to use them. Developers usually don't have one. Banks and large corporations do. So, the two sides are paired inside a partnership built to hand most of the benefits to the investor early in the project's life. 

The mechanics are neater than they sound. In a typical partnership flip, the tax equity investor takes around 99 percent of the tax attributes plus a slice of the project’s cash, usually between 5 and 30 percent, until it earns a set return (American Council on Renewable Energy, 2023). Then the allocations flip, and the sponsor takes back most of the economics. The investor came for the tax benefits, collected its return, and stepped back. 

You can watch this happen at almost any size. Origis Energy closed $118 million of tax equity from RBC Community Investments for a 65-megawatt solar project paired with a battery in Kern County, California (PV Tech, 2026). rPlus Energies raised about $100 million from Truist Bank for a 125-megawatt project in Idaho that helps supply a Meta data center (rPlus Energies, 2025). Radial Power closed $355 million of combined tax equity and debt with Goldman Sachs across a 214-megawatt distributed-solar portfolio (Radial Power, 2026). Different sizes, same trade underneath: a developer turning tax benefits it can’t use into cash it can. 

The newer wrinkle is transferability. Recent law lets developers sell many of these credits outright, so instead of building a partnership around a credit, a developer can simply sell it to a corporate buyer. That hasn’t killed traditional tax equity so much as widened the market around it. Hybrid structures that plan on selling part of the credits into the transfer market, known as T-flips, made up roughly 60 percent of tax equity committed in 2024 (Utility Dive, 2025). The biggest deals now often use every tool at once. IPX Power’s $4.95 billion Darden project in California combined construction debt, tax equity from J.P. Morgan and Morgan Stanley, and separate tax-credit purchase agreements in a single financing (ESG Today, 2026). 

Across 2025, U.S. tax-credit monetization through tax equity, preferred equity, and transfers reached about $63 billion, up more than a quarter from the year before (Crux, 2026a). It is a real market, and it keeps getting deeper. 

Where the risk sits 

Now for the first question a credit investor asks: “If the project disappoints, who absorbs it?” 

Read the stack from the bottom up and you get a waterfall. Revenue reaches senior lenders first, then the tax and mezzanine layers, and only what remains flows to sponsor equity. That ordering, the structural subordination that decides who is protected by whom, is the entire point of the design. Senior debt can price cheaply because three layers of capital stand between it and the first dollar of loss. 

Subordination only helps, though, if the revenue itself holds up, and that is why the contract to buy the power matters more than anything else in the stack. Lenders finance a project generously when its cash flows are contracted and predictable and its running costs are low. They pull back when a project is left exposed to swinging wholesale prices on the merchant market. 

The contracts come in a few shapes worth knowing. Enlight’s Roadrunner project sells under a 20-year busbar power purchase agreement to an Arizona electric cooperative, a long-fixed relationship with a single buyer (Enlight Renewable Energy, 2025). Cypress Creek’s Steel River project in Arkansas locked in its early revenue through a virtual power purchase agreement with an investment-grade corporate buyer, a financial contract that fixes the price without anyone taking physical delivery (POWER Magazine, 2026). And a growing share of new demand now comes from data centers, as in that rPlus deal supplying Meta. In every case, the length of the contract, and above all the credit quality of the buyer, sets the terms for every layer above it. A project’s cost of capital is a bet on its offtaker’s balance sheet. 

That is why two projects with identical panels can carry completely different financing costs. A twenty-year contract with an investment-grade buyer turns a power plant into something that behaves like a bond. Selling into a merchant market leaves you holding something much closer to equity risk. 

Assembling the stack over time 

The layers don’t all arrive together. They enter on a schedule that follows the project’s life. 

Early development capital goes in first, the riskiest money of all, funding a project that isn’t yet bankable. As construction starts, senior construction debt and tax equity commit. Tax equity in particular usually has to be in place before the project reaches its commercial operation date, because eligibility for the credits depends on it (Crux, 2026b). The project gets built, energized, and switched on. Then, in the operating phase, construction loans convert into long-term debt, and any tax-credit transfers are typically done as a one-time sale once the project is running. 

CO Bar shows the seams. Enlight closed its debt in mid-2026 but expects to sign its tax equity agreement in 2027, the two layers of one project locking in more than a year apart (Construction Front, 2026). A capital stack is less a snapshot than a sequence, each layer clicking in as the project earns its way to the next kind of money. 

The stack as a risk machine 

Step back and the capital stack stops looking like an accounting chart. It is a machine for cutting one project’s risk into pieces and handing each piece to whoever is best placed to hold it. Sponsors take development risk because they understand it. Tax investors take tax risk because they can actually use the benefits. Banks take the safest, most contracted slice because their own cost of funds demands it. Every return in the stack is the price of the risk that layer signed up for. 

And the machine keeps getting more capable. Total lending to U.S. clean power, fuels, and manufacturing came to about $120 billion in 2025, and transferability has pulled a new set of players, corporate credit buyers and specialty funds, into a market that once ran through a handful of banks (Renewable Energy Magazine, 2026). What is left is a deeper, more liquid, more finely divided stack than existed a few years ago. 

None of these developments alters the underlying questions that any such project invites. Whatever the size of the headline figure, a financing can be understood by tracing the sequence of repayment, identifying which layer absorbs the first loss, and examining the contract on which the whole structure rests. Read in this way, a three-billion-dollar deal ceases to be a single number and resolves into a legible architecture of allocated risk. 

References 

American Council on Renewable Energy. (2023, December). The risk profile of renewable energy tax equity investments. https://acore.org/resources/the-risk-profile-of-renewable-energy-tax-equity-investments/ 

Construction Front. (2026, June 29). Enlight reaches financial close on US$2.6B debt financing for CO Bar solar and storage complex in Arizona. https://constructionfront.com/2026-06-29-enlight-reaches-financial-close-on-us2-6b-debt-financing-for-co-bar-solar-and-storage-complex-in-arizona/ 

Crux. (2026a, April 8). The state of clean energy finance in 2025: Market intelligence Q&A. https://www.cruxclimate.com/insights/the-state-of-clean-energy-finance-in-2025-q-a-with-cruxs-katie-bays 

Crux. (2026b, February 24). Understanding renewable energy project finance from start to finish. https://www.cruxclimate.com/insights/understanding-renewable-energy-project-finance 

Energy-Storage.news. (2026, June 27). Enlight secures financing for 1.2GW/4GWh Arizona solar-and-storage complex. https://www.energy-storage.news/enlight-secures-financing-for-1-2gw-4gwh-arizona-solar-and-storage-complex/ 

Enlight Renewable Energy. (2025, September 29). Enlight secures nearly $340 million in tax equity partnerships for Roadrunner solar and energy storage project [Press release]. GlobeNewswire. https://www.globenewswire.com/news-release/2025/09/29/3157537/0/en/Enlight-Secures-Nearly-340-Million-in-Tax-Equity-Partnerships-for-Roadrunner-Solar-and-Energy-Storage-Project.html 

ESG Today. (2026, May 26). Intersect spinoff IPX Power secures $4.95 billion to build massive California solar & storage project. https://www.esgtoday.com/intersect-spinoff-ipx-power-secures-4-95-billion-to-build-massive-california-solar-storage-project/ 

Impact Capital Partners. (2025, December 22). Capital stacks 101: How clean energy projects get financed. https://impactcp.org/insights/capital-stacks-101-how-clean-energy-projects-get-financed/ 

Matrix Renewables. (2026, June 23). Matrix Renewables closes portfolio financing and secures tax equity commitments for U.S. utility-scale solar and storage projects with a combined capacity of 859MWdc and 167MWh [Press release]. PR Newswire. https://www.prnewswire.com/news-releases/matrix-renewables-closes-portfolio-financing-and-secures-tax-equity-commitments-for-us-utility-scale-solar-and-storage-projects-with-a-combined-capacity-of-859mwdc-and-167mwh-302807761.html 

POWER Magazine. (2026, June 11). Cypress Creek closes $3.5-billion in financing for large Arkansas solar+storage project. https://www.powermag.com/cypress-creek-closes-3-5-billion-in-financing-for-large-arkansas-solarstorage-project/ 

PV Tech. (2026, April 9). Origis secures US$118 million in tax equity for California solar-plus-storage project. https://www.pv-tech.org/origis-secures-us118-million-tax-equity-california-solar-plus-storage-project/ 

Radial Power. (2026, January 20). Radial Power closes $355 million tax equity and debt financing with Goldman Sachs to support 214 MW distributed solar portfolio [Press release]. Business Wire. https://www.businesswire.com/news/home/20260120553190/en/ 

Renewable Energy Magazine. (2026, February 24). Crux 2025 Market Intelligence Report shows US clean energy finance adapted and grew. https://www.renewableenergymagazine.com/panorama/crux-2025-market-intelligence-report-shows-us-20260224 

rPlus Energies. (2025, September 8). rPlus Energies secures approximately $100 million in tax equity financing with Truist Bank for Pleasant Valley Solar 2 [Press release]. GlobeNewswire. https://finance.yahoo.com/news/rplus-energies-secures-approximately-100-141300412.html 

Utility Dive. (2025, June 6). Transferability is transforming clean energy project finance, say dealmakers. https://www.utilitydive.com/news/transferability-ira-clean-energy-tax-credits-project-finance-congress-trump/750046/