Argo Infrastructure Partners has secured a $435 million senior secured notes financing for Smoky Mountain Holdings, a joint venture with Brookfield. This deal, the first of its kind in the US private placement market, underscores a strategic shift in clean energy financing and could reshape how hydroelectric projects are funded in the future.
The financing supports the Smoky Mountain hydroelectric facilities, including the Cheoah, Calderwood, Chilhowee, and Santeetlah dams. These facilities are poised to become a cornerstone of clean energy supply in the Tennessee Valley, particularly as demand from data centres surges. The innovative structure of the financing, which combines fixed and variable amortisation features, attracted strong investor interest, with both tranches oversubscribed.
Jason Zibarras, founder and managing partner of Argo Infrastructure Partners, highlighted the project’s alignment with the growing demand for low-carbon energy driven by the AI economy. “This innovative investment-grade financing represents another step in supporting clean energy in the Tennessee Valley and the resilient, low-carbon energy that the AI economy demands,” Zibarras said. The project also demonstrates a commitment to innovation and economic growth, positioning the US as a leader in the global AI ecosystem.
The financing is closely tied to a ten-year power purchase agreement signed with the Tennessee Valley Authority (TVA) in 2024. Under this agreement, Smoky Mountain Holdings will deliver over 14 gigawatt hours (GWh) of domestically sourced carbon-free hydroelectric energy. This output is expected to avoid more than 11 million tonnes of CO₂ emissions for TVA’s customers over the next decade, a significant contribution to the region’s sustainability goals.
Brice Soucy, director at Smoky, emphasised the transaction’s role in fortifying the nation’s energy grid and powering future innovation. “We’re proud to have closed this first-of-its-kind financing structure, which reflects Smoky’s status as a best-in-class, flexible and dispatchable clean energy portfolio,” Soucy said. As digitalisation, AI, and advanced industries redefine energy demand, this transaction not only supports the grid but also fuels the next wave of technological breakthroughs.
The successful completion of this financing could set a precedent for similar projects, encouraging other hydroelectric facilities to adopt innovative financing structures. It also highlights the growing importance of clean energy in meeting the demands of a rapidly evolving economy. As the sector continues to evolve, such transactions may become more common, shaping the future of energy development and sustainability.