Project Financing

New Community Wind Financing Handbook

The Environmental Law & Policy Center has published an updated version of the Community Wind Financing Handbook. This guide reflects new financing opportunities available from federal energy and economic stimulus legislation, the new Farm Bill, and state incentives.

Community Wind Financing Handbook

Since ELPC published the first edition of the Community Wind Financing Guide in 2004, wind power has become the United States' fastest-growing source of electricity. Community wind projects, which represent a small but growing share of the wind market, are largely owned by farmers and other local investors with a significant economic stake in the project. Such local ownership generates powerful economic and social benefits for rural areas.

The updated Handbook provides the latest information on financing community wind projects, including ownership structures, roles of financial intermediaries, sources of federal and state financial support and consultant/developer directories. Although building these projects has become somewhat easier over time, understanding and accessing financing opportunities remains perhaps the most important requirement for a successful project.

The Handbook can be downloaded at no cost on the ELPC web site from the link below.

Department of Energy Streamlines Loan Guarantee Process for Renewable Energy

U.S. Department of Energy

Washington DC — The U.S. Department of Energy (DOE) has announced it will provide up to $750 million in funding from the American Recovery and Reinvestment Act to help accelerate the development of renewable energy generation projects. This funding will cover the cost of loan guarantees which could support as much as $4 to 8 billion in lending to eligible projects, and the Department will invite private sector participation to accelerate the financing of these renewable energy projects.

The Recovery Act created a new Section 1705 under Title XVII of the Energy Policy Act of 2005 (Title XVII) for the rapid deployment of renewable energy projects and related manufacturing facilities, electric power transmission projects and leading edge biofuels projects that commence construction before September 30, 2011. The new Financial Institution Partnership Program (FIPP) offers a streamlined set of standards designed to accelerate DOE's loan guarantee underwriting process and leverage private sector expertise and capital for the efficient and prudent funding of eligible projects.

This first solicitation under the new program will seek loan guarantee applications for conventional renewable energy generation projects, such as wind, solar, biomass, geothermal and hydropower. Past solicitations for renewable energy generation projects have focused on loan guarantee applications using new or innovative technologies not in general use in the marketplace.

Under this first FIPP solicitation, proposed borrowers and project sponsors do not apply directly to DOE; instead they work with financial institutions satisfying the qualifications of an eligible lender which may apply directly to DOE to access a loan guarantee. The solicitation invites applications from eligible lenders for partial, risk-sharing loan guarantees from DOE.

Read more information on this solicitation and the Department's Loan Guarantee Program at www.lgprogram.energy.gov

Second Round of Clean Energy Awards Announced by Treasury

Washington, D.C. - The U.S. Treasury Department has announced the second round of awards for cash assistance to energy producers in place of tax credits. This provides provides an additional $550 million, bringing the total to more than $1 billion awarded to dateto companies committed to investing in domestic renewable energyproduction.

“This Recovery Act program is an example of a true federal partnership with the private sector,” said Treasury Secretary Tim Geithner. “Not only are our Recovery dollars meeting an immediate funding need among innovative companies, they are also jumpstarting private sector investment in communities across the country, with benefits for the renewable energy industry and our economy alike.” 

Created under Section 1603 of the Recovery Act, the program provides cash assistance to energy producers in place of tax credits. The payments improve project viability, enabling companies to create and retain jobs, and establish sufficient financing bases for projects that may otherwise not be possible, dramatically expanding and accelerating the development of renewable energy projects throughout the country. Under this program, the federal government provides a cash payment in lieu of a tax credit totaling 30 percent of the qualifying cost of the project; for each federal dollar spent in payments, more than two dollars are spent in private sector investments. 

The following 25 projects were funded in this announcement.

STATE

PROJECT

LOCATION

AMOUNT

CA

Bob's Big Boy LLC

Burbank, CA

$53,648

CA

Ameresco Half Moon Bay LLC

Half Moon Bay, CA

$6,641,747

CA

Ameresco Keller Canyon LLC

Pittsburgh, CA

$2,796,377

CA

BioFuel Oasis Cooperative, Inc

Berkely, CA

$16,858

CO

5135 Company

Denver, CO

$23,130

FL

Conditioned Air Corporation of Naples

Naples, FL

$50,250

HI

Two Daughters

Kihei, HI

$15,150

IA

Barton Wind Farm

Kinsett, IA

$93,419,883

MN

BI

Minneapolis, MN

$25,649

MN

Spruce Tree Centre

St. Paul, MN

$107,764

MO

Farmers City Wind Farm

Tarkio, MO

$84,959,857

MO

Ameresco Jefferson City LLC

Jefferson City, MO

$2,300,244

NC

Solar Billboard Property

Bolivia, NC

$5,850

NJ

Meadowlands Exposition Center

Secaucus, NJ

$767,937

NJ

EHT Leasing LLC

Egg Harbor Township

$118,560

NJ

OC Kearny

Kearny, NJ

$992,006

NV

Enel Salt Wells, LLC

Fallon, NV

$21,196,478

NV

Enel Stillwater, LLC

Fallon, NV

$40,324,394

NY

OP 110 E. 59th St. CHP

New York, NY

$415,774

SD

Impervious Energy Systems, LLC

Whitewood, SD

$31,511

TX

Barton Chapel Wind Farm

Jacksboro, TX

$72,573,627

TX

Rio Grande Valley Sugar Growers, Inc.

Santa Rosa, TX

$10,232,261

TX

Bull Creek Wind LLC

O'Donnell, TX

$91,390,497

TX

Pyron Wind Farm, LLC

Roscoe, TX

$121,903,306

VT

Wheeler Brook Apartments

Warren, VT

$19,155

 

 

 

$550,381,913

Loans for Community-Based Wind Projects in Northeastern Minnesota

2009: Duluth, MN - The Arrowhead Regional Development Commission (ARDC) and the Northland Foundation have partnered to provide a revolving loan fund that will provide early-stage project development and feasibility analysis for community-based wind energy projects. The revolving loan fund will be available in Aitkin, Carlton, Cook, Itasca, Koochiching, Lake and St. Louis counties.

The revolving loan fund is part of the Rural Energy Development Initiative (REDI), a state-wide program addressing community-based wind energy development. REDI loan financing is limited to early stage project development and feasibility analysis for wind energy electric generation projects that intend to sell the electricity to an electric utility. Maximum loan size is $25,000 for any one project and/or borrower. ARDC functions as the regional REDI organizer for northeast Minnesota. The Northland Foundation is the acting loan partner for the revolving loan fund. 

For more information regarding the revolving loan fund and/or the application for the loan fund, please see the website or contact Bonnie Hundrieser (ARDC) at 218-529-7527 or bhundrieser@ardc.org

PTC, ITC or Cash Grant? Which Should a Developer Use?

Lawrence Berkely National Laboratory (LBNL) and the National Renewable Energy Laboratory (NREL) have released a combined report that may help wind project developers understand which federal incentives will be most economical: PTC, ITC, or Cash Grant? An Analysis of the Choice Facing Renewable Power Projects in the United States.

The report takes a close look at key provisions in the recent American Recovery and Reinvestment Act of 2009. These key provisions could have a significant impact on how renewable energy projects are financed in the near future.

Included in these provisions is an extension of the federal production tax credit (PTC). Another provision allows for projects that are eligible for the PTC to elect to receive a 30% investment tax credit (ITC) instead of the PTC. An even more intriguing provisions allows for a project that qualifies for the ITC (or the PTC but elects to receive the ITC) to receive the value of that credit as a cash grant from the Treasury.

The authors analyzed a number of technologies in the report including wind, open- and closed-loop biomass, geothermal and landfill gas projects. The purpose of the analysis is to both quantitatively and qualitatively analyze the choice between the PTC and ITC (or cash grant) from the project developer perspective. Only two technologies showed a clear preference for one incentive over the other: open-loop biomass gets more value from the ITC across the board, while geothermal gets more value from the PTC.

For wind energy, the authors looked at a range of installed costs from $1.500/kW to $2,500/kW and a range of capacity factors from 25% to 45%. They did not include the potential influence on project costs due to nameplate capacity in the presence of economies of scale. These quantitative results showed the PTC provided more value in approximately 2/3 of the cases analyzed.

The authors also looked at qualitative factors that can also influence the decision of which incentive a developer wants to use. These factors include: the option to elect the cash grant; performance risk; tax credit appetite; liquidity; subsidized energy financing; power sale requirement; and the owner/operator requirement. Combining the quantitative and qualitative considerations, the authors found that most wind projects may benefit more from the ITC than they will from the PTC.

As the report concludes, whether a particular project chooses the PTC or ITC or cash grant will depend on any number of factors that will be weighed by each project according to their priorities, and the fact that these choices for federal incentives now exist (temporarily) is a step in the right direction to broaden the participation base in renewable energy.

Click here to download and read the full report (19 pages)
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