Energy investment firm Copenhagen Infrastructure Partners (CIP) and Avangrid Inc., a U.S.-based renewables arm of Iberdrola Group, said Oct. 25 they sealed a $1.2 billion tax equity package for the 800-megawatt Vineyard Wind 1 project offshore Massachusetts.

The financing agreement, which CIP called the largest single asset tax equity financing and the first for a commercial scale offshore wind project, was reached with J.P. Morgan Chase, Bank of America and Wells Fargo, CIP said in a news release.

“Finalizing this tax equity transaction is a critical milestone in executing the financing plan for Vineyard Wind 1,” Avangrid CEO Pedro Azagra said in the release. “It will allow us to continue financing the project to make it operational.”

Offshore wind developers have been challenged lately with supply chain issues and rising costs. However, many have moved forward with projects amid the push for lower-carbon energy resources to reduce emissions.

Vineyard Wind is expected to become the first commercial-scale offshore wind project in the U.S. when operations begin. The project, which will feature 62 of GE’s 248-m-tall Haliade-X wind turbine generators, is expected to enter service this year. Vineyard Wind is designed to produce enough electricity to power more than 400,000 homes and businesses. It is also expected to reduce emissions by more than 1.6 million tons per year, according to Iberdrola, which said that is equivalent to removing 325,000 vehicles from roads.

Power purchase agreements have already been reached with National Grid, Eversource and Unitil.

The Vineyard Wind joint venture said in September 2021 it had closed on $2.3 billion of senior debt to finance construction of the project, working with nine international and U.S. banks.

“Closing on a tax equity package has always been a central element to achieving financial success for the first-of-its-kind Vineyard Wind 1,” said Tim Evans, partner and head of North America for CIP. “With this investment, Vineyard Wind 1 moves Massachusetts closer to its goal of reducing greenhouse gas emissions by 50% by 2030.”

CCA Group, Santander Corporate & Investment Banking and Kirkland & Ellis LLP served as financial and legal advisors to Vineyard Wind 1, CIP and Avangrid on the tax equity package.