The Tennessee Valley Authority Monday sold its first ever “green bonds” to fund new solar and battery storage projects and achieved a record low borrowing rate for a 10-year note in the process.
TVA sold the $500 million of bonds at an interest rate of only 1.5% in its first offering of a sustainability-focused financial instrument. TVA’s previous lowest borrowing rate on a 10-year maturity note was set in 2012 when TVA issued bonds at a rate of 1.875%.
The record low rate on the latest bonds is projected to save TVA over $15 million in annual interest expense compared to TVA’s debt instruments that matured earlier in 2021.
A potential TVA solar project in northern Alabama and a possible TVA energy storage project in eastern Tennessee are possible uses of the new funding, although both projects are still undergoing detailed environmental reviews.
To limit its carbon emissions linked with global warming, TVA is phasing out by 2035 the last of the 59 coal-fired units it once used to generate most of its electricity. The coal generation has or will be replaced with new solar power, energy-efficient natural gas plants and upgraded output from both TVA’s nuclear and hydroelectric power plants, as well as more purchased solar, wind and other renewable generation.