On a huge piece of land in West Texas about five and a half times larger than Central Park, a massive new solar farm–one of the largest in the U.S.–is now under construction. For Facebook, which is investing hundreds of millions in the project, it’s the next step toward a goal of powering its global operations with 100% renewable electricity by the end of next year.
The company, which has also signed deals to buy wind and solar power near its data centers around the world, took a different approach with the new solar farm: Instead of a long-term agreement to buy power from the plant, it made a direct investment. “We are always looking for additional flexibility in the ways that we meet our renewable energy goals,” says Peter Freed, energy strategy manager at Facebook. “Investment really provided another potential avenue of meeting those renewable energy objectives.” The total investment isn’t public, though the company says that it is investing a “significant” portion of the total costs of the project. The solar farm, called Prospero Solar, has a financing package alone of $416 million, and the total cost is even larger.
When it chooses new renewable energy projects to support, Facebook looks for projects that might not have otherwise happened. “We were involved very early in this project, much earlier than investors are typically involved in projects, because we wanted to make sure that we can really say that our involvement helped it move forward and got it across the finish line,” says Freed. The project, which covers 4,600 acres, will have a capacity of 379 megawatts, enough to power nearly 300,000 homes.
Facebook is a tax equity investor in the solar farm, which means that it can take advantage of federal tax credits generated by the project. It’s a type of investment more often provided by banks when solar developers don’t have enough taxable income to fully benefit from the tax credit. “Facebook has the tax bill,” Freed says. “One of the things that we get from this project will be investment tax credits because it’s a solar project and we can use that to offset tax exposure.” The company will also make money as the solar farm sells energy to Shell Energy North America, which has signed a long-term purchase agreement. Both Facebook and Shell will get renewable energy credits as the farm produces solar power. (Shell is purchasing “offtakes” from the farm, meaning it will resell the energy to others.)
Facebook hopes that other businesses consider similar investments. “It’s really about expanding the toolbox and trying to find new things that might work for us in meeting [renewable energy] goals and also trying to bring the industry along with us,” Freed says.