Re: [WindPower] New LBNL report profiles innovation in "community wind" project finance

1.27.2011

Re: [WindPower] New LBNL report profiles innovation in "community wind" project finance

On Thu, Jan 27, 2011 at 12:46 PM, Anne Margolis <Anne@cleanegroup.org> wrote:

Please see the announcement below on the availability of a new LBNL report, "Community Wind: Once Again Pushing the Envelope of Project Finance," which may be useful to those of you working to finance community wind projects.

Thanks!
Anne

From: cesamembers-bounces@cleanenergystates.org On Behalf Of Mark Bolinger
Sent: Wednesday, January 26, 2011 11:44 AM
To: cesamembers@cleanenergystates.org
Subject: [CESAmembers] new LBNL report profiles innovation in "community wind" project finance

Dear colleague-
The "community wind" sector in the United States – loosely defined here as consisting of relatively small utility-scale wind power projects that sell power on the wholesale market and that are developed and owned primarily by local investors – 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. For example, a variation of one of the most common financing arrangements in the U.S. wind market today – the "partnership flip" structure – was first developed by community wind projects in Minnesota more than a decade ago before being adapted by the broader wind market.

More recently, a handful of community wind projects built over the past year have been financed via new and creative structures that push the envelope of wind project finance in the U.S. These include:

1) a 4.5 MW project in Maine that combines low-cost government debt with local tax equity,

2) a 25.3 MW project in Minnesota using a sale/leaseback structure,
3) a 10.5 MW project in South Dakota financed by an intrastate offering of both debt and equity,

4) a 6 MW project in Washington state that taps into New Markets Tax Credits using an "inverted" or "pass-through" lease structure, and
5) a 9 MW project in Oregon that combines a variety of state and federal incentives and loans with unconventional equity from high-net-worth individuals.

In most cases, these are first-of-their-kind structures that could serve as useful examples for other projects – both community and commercial wind alike.

I am pleased to announce the release of a new Berkeley Lab report that describes each of these innovative new financing structures in some detail, using a case-study approach. The purpose of this 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.

The report begins by briefly summarizing how most community wind projects in the U.S. have been financed historically (i.e., prior to this latest wave of innovation). It then describes the recent federal policy changes, including several implemented as a result of the American Recovery and Reinvestment Act of 2009, that have enabled a new wave of financial innovation to occur. Brief case studies of each of the five projects mentioned above follow, describing how each project was financed and noting the financial significance of each. Finally, the report concludes by distilling a number of general observations or pertinent lessons learned from the experiences of these five projects.

The full 28-page report, titled "Community Wind: Once Again Pushing the Envelope of Project Finance," can be downloaded at no charge from http://eetd.lbl.gov/EA/EMP/re-pubs.html

A PowerPoint slide summary of the report can also be downloaded from the same web site.
I hope you find this report to be useful, and apologize in advance for cross-postings.