(January, 2011) Lawrence Berkeley National Laboratory (LBNL) has released a 34-page report to the public: "Community Wind: Once Again Pushing the Envelope of Project Finance," by Dr. Mark Bolinger. The report describes innovative financing and organizational structures for five community wind projects constructed in 2010.
Bolinger said the purpose of the report is two-fold: (1) to disseminate useful information on these new financial structures, most of which are widely replicable; and (2) to highlight the recent policy changes – many of them temporary unless extended – that have facilitated this innovation.
In most cases, the projects are first-of-their-kind structures that could serve as useful templates for both community and commercial wind alike. Community Wind "has historically served as a 'test bed' or 'proving grounds' not only for up-and-coming wind turbine manufacturers trying to break into the broader U.S. wind market, but also for wind project financing structures," Bolinger stated.
Fox Islands Wind, Sugarloaves and Brown's Head Light, Vinalhaven, Maine, photo: Ivan Storck
"In addition to its significance as an engaging story – i.e., a photogenic island wind power project that overcame significant logistical hurdles to reduce local electricity costs – the Fox Islands Wind project is also significant in the way it was financed," states the report. "Most notably, the 20-year RUS term loan is the first loan that the RUS has offered to a wind project on a project finance basis. It is also, therefore, the first time that a low-interest RUS loan has been combined with federal tax incentives and investors interested in those incentives. Combining these two historically separate instruments of finance – i.e., low-cost government debt and tax equity leveraging federal tax incentives – helped make even this relatively expensive project (at least on a $/MW installed cost basis) financeable."