A Review of Wind Project Financing Structures in the USA

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The rapid pace of wind power development in the U.S. over the last decade has outstripped the ability of most project developers to provide adequate equity capital and make efficient use of project-related tax benefits. In response, the sector has created novel project financing structures that feature varying combinations of equity capital from project developers and third-party tax-oriented investors, and in some cases commercial debt. While their origins stem from variations in the financial capacity and business objectives of wind project developers, as well as the risk tolerances and objectives of equity and debt providers, each structure is, at its ... continued below

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Bolinger, Mark A; Harper, John & Karcher, Matthew September 24, 2008.

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The rapid pace of wind power development in the U.S. over the last decade has outstripped the ability of most project developers to provide adequate equity capital and make efficient use of project-related tax benefits. In response, the sector has created novel project financing structures that feature varying combinations of equity capital from project developers and third-party tax-oriented investors, and in some cases commercial debt. While their origins stem from variations in the financial capacity and business objectives of wind project developers, as well as the risk tolerances and objectives of equity and debt providers, each structure is, at its core, designed to manage project risk and allocate federal tax incentives to those entities that can use them most efficiently. This article surveys the six principal financing structures through which most new utility-scale wind projects (excluding utility-owned projects) in the U.S. have been financed from 1999 to the present. These structures include simple balance-sheet finance, several varieties of all-equity special allocation partnership 'flip' structures, and two leveraged structures. In addition to describing each structure's mechanics, the article also discusses its rationale for use, the types of investors that find it appealing and why, and its relative frequency of use in the market. The article concludes with a generalized summary of how a developer might choose one structure over another.

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  • Journal Name: Wind Energy; Journal Volume: 12; Journal Issue: 3; Related Information: Journal Publication Date: April 2009

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  • Report No.: LBNL-2058E
  • Grant Number: DE-AC02-05CH11231
  • Office of Scientific & Technical Information Report Number: 962718
  • Archival Resource Key: ark:/67531/metadc931419

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Office of Scientific & Technical Information Technical Reports

Reports, articles and other documents harvested from the Office of Scientific and Technical Information.

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  • September 24, 2008

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  • Nov. 13, 2016, 7:26 p.m.

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  • Jan. 4, 2017, 6 p.m.

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Bolinger, Mark A; Harper, John & Karcher, Matthew. A Review of Wind Project Financing Structures in the USA, article, September 24, 2008; Berkeley, California. (digital.library.unt.edu/ark:/67531/metadc931419/: accessed September 23, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.