Description
Finance is the science[citation needed] of funds management, or the allocation of assets and liabilities over time under conditions of certainty and uncertainty. A key point in finance is the time value of money, which states that a unit of currency today is worth more than the same unit of currency tomorrow
Developing & Financing Renewable Energy Projects in Indian Country
Presenter: Robert Springer, National Renewable Energy Laboratory (NREL)
RES2012 CONFERENCE LAS VEGAS, NEVADA MARCH 1, 2012
Context
Technically, Indian lands have enough renewable energy resource to produce: There are a number of barriers constraining this potential including: • Infrastructure and transmission; • Project development capacity; • Project financing options; • Permitting barriers; • Expertise; • Other
? 1 billion megawatt-hours (MWh) of wind (about 148,000 homes) ? 7 billion MWh of solar photovoltaics (PV) ? 4 trillion MWh of biomass
Or? Hey that doesn’t make sense!
Project Project Development Project Development && Finance Finance Finance?
“and then”
And
Finance
Key Concepts
• Project Context & Motivation
– What is your interest in the project (e.g. revenue, self-reliance)? – What are the basics of your energy environment (e.g. utility relationship, governance structure, energy sources and costs, key decision makers)?
• Project Development Discipline
– How will this work and how long will it take? – What are the stage gates for moving projects forward?
Bankability
? Process discipline essential to organize and advance a viable project. ? Bankable projects will attract capital and different financing options.
Motivation: Two Paths
Cost Avoidance Community Project Value proposition • Save money • Reduce electricity costs • Energy independence Success Measurement • Cost avoidance Market Indicator • Retail electricity price Decision Discipline • Capital budgeting Business Venture Commercial Project Value proposition • Sell electricity for money Success Measurement • Levelized cost of energy Market Indicator • Wholesale electricity prices, demand Decision Discipline • Investment/business decision
Project Development Framework
$
Time
Site
Resource Off-take
Development Risk Capital
Project Finance (Construction)
Asset Finance
Unknowns
Risk
Permits
Technology Team Capital
BEPTCTM and SROPTTCTM are trademarks of the Alliance for Sustainable Energy, LLC, the operator of the National Renewable Energy Laboratory
Project Development Framework
Site
No Site, No Project
• Site control • Size and shape • Location to load and T&D • Long-term control • Financial control • Clear title • Lease terms • Collateral concerns • Environmental • Access • O&M access • Upgradable
Resource
Engineering Assessment
• Volume/ Frequency • Variability • Characteristics (power/speed) • 24-hour profile • Monthly, seasonal and annual variability • Weather dependence • Data history • Std. Deviation • Technology suitability
Off-Take
Off-take Contract – (Revenue)
• Credit of counterparty • Length of contract • Terms and conditions • Reps and warranties • Assignment • Curtailment • Interconnection • Performance • Enforcement • Take or pay • Pricing and terms
Permits
Anything that can stop a project if not in place…
• Permitting/ entitlements • Land disturbance • Environmental • Cultural impacts • Resource assessments • Wildlife impacts • Habitat • NEPA, EIS • Utility interconnection • Other utility or PUC approvals
Technology
Engineered System
• Engineering design plans • Construction plans • Not generic solar panel and inverter • Engineered resource/ conversion technology/ balance of system designs • Specifications • Bid set
Team
Professional, Experienced, Diverse
• Business management • Technical expertise • Legal expertise • Financial expertise • Utility interconnection expertise • Construction/ contract management • Operations • Power marketing/ sales
Capital
Financing Structure
• Development equity • Project equity • Project debt • Mezzanine or bridge facility • Tax equity • Grants, rebates, other incentives • Environmental attribute sales contracts (RECs) • Bond finance • Non-recourse project finance
CONTINUOUS, ITERATIVE, PROCESS
SROPTTCTM is a trademark of the Alliance for Sustainable Energy, LLC, the operator of the National Renewable Energy Laboratory
Renewable Project Finance
• Economics are Dependent on Tax Equity/Other Policy
– Governments/non-profits have no tax appetite – Utilities may value Renewable Energy Credits (REC) to satisfy legal requirements – 3rd party finance is the solution
• Key Contract: Power Purchase Agreement (PPA)
– A long term, financeable commitment to buy project output – in kWh’s and/or attributes (like RECs) – Allows developer to monetize tax or other policies
? Several common financing structures and financing sources are used by the renewable energy industry to finance a PPA
Project Debt
Bank Private Bond
Project Finance
Term Loan
Tax Equity
Levered
Unlevered
Lease Equity
Lease equity market, institutional NA (Investment Grade Offtaker) Sized to 2049% of Capital Stack
DOE
DOE supports 100% or 80%
Investor Universe Target Rating Market Capacity
Commercial Banks “Investment Grade” no rating needed Up to $1 Billion; up to 1.0XDSCR in Low Case L+250-350 2007: 100-150 +fees 1.5-2.0%
Private or 144A Offering
Institutional investors w/energy focus B is doable; BB is preferred
Financial investors and some corps. with tax appetite.
BBB-/NAIC 2
NA (Investment Grade Off-taker)
NA
+$1.0 Billion
$750 Million
Sized to target IRR
No Limit
Indicative Pricing
7% Area; T + 5%-6% Fixed
L+250-500; 425 - 450 Libor floor;
11-13.5; IRR by Flip
9-10.5% IRR by Flip
9.0-12.5% after tax yield
T+75-100 bps
Tenor
5-7 years typical, up to 15
Term of PPA (20-25); Prepayment Penalty
Up to 7 years
Target IRR reached by year 10 with PTC; 6-7 with ITC
80% of Useful Life
Up to 30 years
DSCR Requirements 1.30-1.40X; 1% Downside flip dates: +3 years in 1.30-1.40 Driven by lockbox; PPA ‘Tail’; EPC with amortization downside; +6 years in severe “RSCR” Like required Sizing Profile credit support; LIBOR Swaps; with cash References: 2010 Barclays Capital; Alyra Renewable Energy Finance; Fulbright & Jaworski - For Information Only Ratings downside Project Debt Reserves sweep
Tax Equity Financing Structures
Options How Tax Equity Return is Earned Tax equity invests capital to achieve target IRR. Upon achievement to target internal rate of Partnership Flip return (IRR) ownership interest automatically “flips” down to contract percentage. Tax equity buys project and leases it back to developer for a term of years. Tax equity invests capital for a preferred return that includes a “pass through” of credit by operation of tax election.
Sale Leaseback
Inverted Lease
Capital/Cash Flows and Deal Structuring
• Partnership Flip Example – Anatomy of a Deal
– An illustration of participants’ roles in a partnership flip transaction – A PPA is assumed to be in place – for kWh sales and/or REC sales – We will visualize the cash flows for each participant
• Key Contract: PPA
– A long term, financeable commitment to buy project output – in kWh’s and/or attributes (like RECs) – Allows developer to monetize tax or other policies
11
Partnership Flip Structure
Developer
Managing Member 1%/95%
Utility
PPA (Fixed Price Or Market)
SPV
99%/5%
Tax Equity Investors
Solar Power Plant
Project Development
800.00
Project Construction
Project Operation
Developer Tax Equity Investor Lender
700.00
600.00
Capital Investment
500.00
400.00
300.00
200.00
Development Costs
Cash Flows and Tax Benefits
100.00
-
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation 19
Construction
Development
Development
Development
Pre-Development
Years
1
Pre-Development
2
3
4
5
Development
6
7
Construction
8
9
10
11
12
13
14
15
16
17
18
20
Partnership Flip Illustration
Operation
Project Development
800.00
Project Construction
Project Operation
Developer Tax Equity Investor Lender
700.00
Fee: Partial Cost Recovery Minimal Returns in Early Years Developer Cash Invest
600.00
500.00
400.00
300.00
Substantial Cash Flow Later
200.00
100.00
-
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation 19
Construction
Development
Development
Development
Pre-Development
Years
1
Pre-Development
2
3
4
5
Development
6
7
Construction
8
9
10
11
12
13
14
15
16
17
18
20
Partnership Flip Illustration
Operation
Project Development
800.00
Project Construction
Project Operation
Developer Tax Equity Investor Lender
700.00
600.00
500.00
400.00
Tax Equity Invested
300.00
Substantial Returns in Early Years
Minimal Cash Flow Later
200.00
100.00
-
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation 19
Construction
Development
Development
Development
Pre-Development
Years
1
Pre-Development
2
3
4
5
Development
6
7
Construction
8
9
10
11
12
13
14
15
16
17
18
20
Partnership Flip Illustration
Operation
Project Development
800.00
Project Construction
Project Operation
Developer Tax Equity Investor Lender
700.00
600.00
500.00
400.00
300.00
200.00
Lender Provides Debt
Debt Payments are Fixed
100.00
-
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation 19
Construction
Development
Development
Development
Pre-Development
Years
1
Pre-Development
2
3
4
5
Development
6
7
Construction
8
9
10
11
12
13
14
15
16
17
18
20
Partnership Flip Illustration
Operation
Financial Players in a Project
• Project Developer • Lender • Investor
TRIBAL COMMUNITY
• Renewable Resource Owner
• Off-taker (power purchaser)
17
Project Development
800.00
Project Construction
Project Operation
Developer Tax Equity Investor Lender
700.00
600.00
500.00
Lender Renewable Resource Owner Long Term Off-taker
400.00
300.00
200.00
Developer Community Scale
100.00
-
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation 19
Construction
Development
Development
Development
Pre-Development
Pre-Development
Development
Construction
Investor Commercial Scale
14 15 16 17
Years
1
2
3
4
5
6
7
8
9
10
11
12
13
18
20
Operation
Case Example – Project Development
• The Campo Band of Mission Indians of the Kumeyaay Nation has a successful wind project and is working on another. • Largest commercial wind facility in Indian Country. 50 MW project with 25 turbines constructed in 2005, online in 2006. • Tribe is compensated for use of land and capture of renewable energy resources. • Project Finance: Tax equity • Tribe now negotiating 160 MW project comfortable to pursue greater participation.
Source: La Chappa, M. and Estes, M. (November 2011). “Renewable Energy: Security, Independence, and Economic Development.” Presented at the DOE Tribal Energy Program Review Meeting. http://apps1.eere.energy.gov/tribalenergy/pdfs/re_dev_campo_wind_estes.pdf. Photo from Campo Band of Mission Indians of the Kumeyaay Nation, NREL/PIX 16548.
Case Example – Self Sufficiency
PROJECT: The Yocha Dehe Tribe is collaborating with UC Davis and the local community on the Capay Valley Energyshed project, which will evaluate current energy usage valley-wide and assess the potential for an increased use of renewables. Almost 20% of Cache Creek Casino Resort’s peak energy demand is supplied by onsite generation of energy from the solar array and fuel cells. MARKET BARRIER: Energy independence TRIBE’S ROLE: Owner, developer, Off-taker TRANSACTION SUMMARY: The Tribe participates in PG&E’s Base Interruptible Program, which means the resort will completely disconnect from the utility power source. OUTCOME: The Tribe will produce its own energy from generators whenever PG&E needs more energy to meet peak demand. This program reduces the need to build new power plants.
Source: “Energy.” Yocha Dehe Wintun Nation. http://yochadehe.org/land-resources/sustainability-initiatives/en. Photo by Steve Wilcox, NREL/PIX 15550.
Case Example – PPA Third Party Financing PROJECT: Boulder County, Colorado, exercised a third-party PPA option by making investments to lower solar project costs.
Project Name Size (DC) Type Developer Owner PPA Terms Boulder County Solar Project 615 kW; 570 kW rooftop, 45 kW ground Bella Energy Rockwell Financial 20 years, fixed-price 6.5 ¢/kWh for first 7 years, renegotiate price and buyout option at beginning of year 8
MARKET BARRIERS: Cost of electricity; price stability; energy demand and net-metering
LOCAL GOVERNMENT ROLE: Sponsor, investor/financier, off-taker TRANSACTION SUMMARY: This structure takes advantage of a government entity’s ability to issue tax-exempt debt or to tap other sources of funding to buy down the cost of the project. POTENTIAL OUTCOME: Pre-payments can improve economics for both parties and provide greater price stability over the life of the contract.
Source: “Power Purchase Agreement Checklist for State and Local Governments.” (October 2009). Published by NREL. http://www.nrel.gov/docs/fy10osti/46668.pdf.
Case Example - PPA Third Party Financing
PROJECT: Denver International Airport (DIA) installed a 2-MW solar array to provide up to half of the electricity to power the people mover transit system. Project Name Size (DC) Type Denver Airport Solar Project 2,000 kW; Ground-mount, singleaxis tracking
MARKET BARRIERS: Cost of electricity; price stability; construction risks
GOVERNMENT ROLE: Sponsor, off-taker TRANSACTION SUMMARY: MMA Renewable Ventures financed and owns the project and sells the electricity it produces to the airport under a longterm power purchase agreement. OUTCOME: DIA reduced electricity costs; Xcel Energy uses the RECs to fulfill its state renewable energy obligation by 2020; MMA Renewable Ventures sells the RECs to Xcel; receives a rebate from Xcel; receives a large tax federal break; and generates guaranteed revenue from the electricity the array produces.
Sources: “Power Purchase Agreement Checklist for State and Local Governments.” (October 2009). Published by NREL. http://www.nrel.gov/docs/fy10osti/46668.pdf. “Green Wombat”. (October 2007). Published by Todd Woody. http://thegreenwombat.com/2007/10/01/denver-airport-goes-solar/.
World Water & Solar Developer Technologies Owner MMA Renewable Ventures
25 years, fixed-price 6 PPA Terms ¢/kWh for first 5 years, buyout option at beginning of year 6 or price increases to 10.5 ¢/kWh
THANK YOU
Contact: Robert Springer [email protected]
doc_204077585.pdf
Finance is the science[citation needed] of funds management, or the allocation of assets and liabilities over time under conditions of certainty and uncertainty. A key point in finance is the time value of money, which states that a unit of currency today is worth more than the same unit of currency tomorrow
Developing & Financing Renewable Energy Projects in Indian Country
Presenter: Robert Springer, National Renewable Energy Laboratory (NREL)
RES2012 CONFERENCE LAS VEGAS, NEVADA MARCH 1, 2012
Context
Technically, Indian lands have enough renewable energy resource to produce: There are a number of barriers constraining this potential including: • Infrastructure and transmission; • Project development capacity; • Project financing options; • Permitting barriers; • Expertise; • Other
? 1 billion megawatt-hours (MWh) of wind (about 148,000 homes) ? 7 billion MWh of solar photovoltaics (PV) ? 4 trillion MWh of biomass
Or? Hey that doesn’t make sense!
Project Project Development Project Development && Finance Finance Finance?
“and then”
And
Finance
Key Concepts
• Project Context & Motivation
– What is your interest in the project (e.g. revenue, self-reliance)? – What are the basics of your energy environment (e.g. utility relationship, governance structure, energy sources and costs, key decision makers)?
• Project Development Discipline
– How will this work and how long will it take? – What are the stage gates for moving projects forward?
Bankability
? Process discipline essential to organize and advance a viable project. ? Bankable projects will attract capital and different financing options.
Motivation: Two Paths
Cost Avoidance Community Project Value proposition • Save money • Reduce electricity costs • Energy independence Success Measurement • Cost avoidance Market Indicator • Retail electricity price Decision Discipline • Capital budgeting Business Venture Commercial Project Value proposition • Sell electricity for money Success Measurement • Levelized cost of energy Market Indicator • Wholesale electricity prices, demand Decision Discipline • Investment/business decision
Project Development Framework
$
Time
Site
Resource Off-take
Development Risk Capital
Project Finance (Construction)
Asset Finance
Unknowns
Risk
Permits
Technology Team Capital
BEPTCTM and SROPTTCTM are trademarks of the Alliance for Sustainable Energy, LLC, the operator of the National Renewable Energy Laboratory
Project Development Framework
Site
No Site, No Project
• Site control • Size and shape • Location to load and T&D • Long-term control • Financial control • Clear title • Lease terms • Collateral concerns • Environmental • Access • O&M access • Upgradable
Resource
Engineering Assessment
• Volume/ Frequency • Variability • Characteristics (power/speed) • 24-hour profile • Monthly, seasonal and annual variability • Weather dependence • Data history • Std. Deviation • Technology suitability
Off-Take
Off-take Contract – (Revenue)
• Credit of counterparty • Length of contract • Terms and conditions • Reps and warranties • Assignment • Curtailment • Interconnection • Performance • Enforcement • Take or pay • Pricing and terms
Permits
Anything that can stop a project if not in place…
• Permitting/ entitlements • Land disturbance • Environmental • Cultural impacts • Resource assessments • Wildlife impacts • Habitat • NEPA, EIS • Utility interconnection • Other utility or PUC approvals
Technology
Engineered System
• Engineering design plans • Construction plans • Not generic solar panel and inverter • Engineered resource/ conversion technology/ balance of system designs • Specifications • Bid set
Team
Professional, Experienced, Diverse
• Business management • Technical expertise • Legal expertise • Financial expertise • Utility interconnection expertise • Construction/ contract management • Operations • Power marketing/ sales
Capital
Financing Structure
• Development equity • Project equity • Project debt • Mezzanine or bridge facility • Tax equity • Grants, rebates, other incentives • Environmental attribute sales contracts (RECs) • Bond finance • Non-recourse project finance
CONTINUOUS, ITERATIVE, PROCESS
SROPTTCTM is a trademark of the Alliance for Sustainable Energy, LLC, the operator of the National Renewable Energy Laboratory
Renewable Project Finance
• Economics are Dependent on Tax Equity/Other Policy
– Governments/non-profits have no tax appetite – Utilities may value Renewable Energy Credits (REC) to satisfy legal requirements – 3rd party finance is the solution
• Key Contract: Power Purchase Agreement (PPA)
– A long term, financeable commitment to buy project output – in kWh’s and/or attributes (like RECs) – Allows developer to monetize tax or other policies
? Several common financing structures and financing sources are used by the renewable energy industry to finance a PPA
Project Debt
Bank Private Bond
Project Finance
Term Loan
Tax Equity
Levered
Unlevered
Lease Equity
Lease equity market, institutional NA (Investment Grade Offtaker) Sized to 2049% of Capital Stack
DOE
DOE supports 100% or 80%
Investor Universe Target Rating Market Capacity
Commercial Banks “Investment Grade” no rating needed Up to $1 Billion; up to 1.0XDSCR in Low Case L+250-350 2007: 100-150 +fees 1.5-2.0%
Private or 144A Offering
Institutional investors w/energy focus B is doable; BB is preferred
Financial investors and some corps. with tax appetite.
BBB-/NAIC 2
NA (Investment Grade Off-taker)
NA
+$1.0 Billion
$750 Million
Sized to target IRR
No Limit
Indicative Pricing
7% Area; T + 5%-6% Fixed
L+250-500; 425 - 450 Libor floor;
11-13.5; IRR by Flip
9-10.5% IRR by Flip
9.0-12.5% after tax yield
T+75-100 bps
Tenor
5-7 years typical, up to 15
Term of PPA (20-25); Prepayment Penalty
Up to 7 years
Target IRR reached by year 10 with PTC; 6-7 with ITC
80% of Useful Life
Up to 30 years
DSCR Requirements 1.30-1.40X; 1% Downside flip dates: +3 years in 1.30-1.40 Driven by lockbox; PPA ‘Tail’; EPC with amortization downside; +6 years in severe “RSCR” Like required Sizing Profile credit support; LIBOR Swaps; with cash References: 2010 Barclays Capital; Alyra Renewable Energy Finance; Fulbright & Jaworski - For Information Only Ratings downside Project Debt Reserves sweep
Tax Equity Financing Structures
Options How Tax Equity Return is Earned Tax equity invests capital to achieve target IRR. Upon achievement to target internal rate of Partnership Flip return (IRR) ownership interest automatically “flips” down to contract percentage. Tax equity buys project and leases it back to developer for a term of years. Tax equity invests capital for a preferred return that includes a “pass through” of credit by operation of tax election.
Sale Leaseback
Inverted Lease
Capital/Cash Flows and Deal Structuring
• Partnership Flip Example – Anatomy of a Deal
– An illustration of participants’ roles in a partnership flip transaction – A PPA is assumed to be in place – for kWh sales and/or REC sales – We will visualize the cash flows for each participant
• Key Contract: PPA
– A long term, financeable commitment to buy project output – in kWh’s and/or attributes (like RECs) – Allows developer to monetize tax or other policies
11
Partnership Flip Structure
Developer
Managing Member 1%/95%
Utility
PPA (Fixed Price Or Market)
SPV
99%/5%
Tax Equity Investors
Solar Power Plant
Project Development
800.00
Project Construction
Project Operation
Developer Tax Equity Investor Lender
700.00
600.00
Capital Investment
500.00
400.00
300.00
200.00
Development Costs
Cash Flows and Tax Benefits
100.00
-
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation 19
Construction
Development
Development
Development
Pre-Development
Years
1
Pre-Development
2
3
4
5
Development
6
7
Construction
8
9
10
11
12
13
14
15
16
17
18
20
Partnership Flip Illustration
Operation
Project Development
800.00
Project Construction
Project Operation
Developer Tax Equity Investor Lender
700.00
Fee: Partial Cost Recovery Minimal Returns in Early Years Developer Cash Invest
600.00
500.00
400.00
300.00
Substantial Cash Flow Later
200.00
100.00
-
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation 19
Construction
Development
Development
Development
Pre-Development
Years
1
Pre-Development
2
3
4
5
Development
6
7
Construction
8
9
10
11
12
13
14
15
16
17
18
20
Partnership Flip Illustration
Operation
Project Development
800.00
Project Construction
Project Operation
Developer Tax Equity Investor Lender
700.00
600.00
500.00
400.00
Tax Equity Invested
300.00
Substantial Returns in Early Years
Minimal Cash Flow Later
200.00
100.00
-
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation 19
Construction
Development
Development
Development
Pre-Development
Years
1
Pre-Development
2
3
4
5
Development
6
7
Construction
8
9
10
11
12
13
14
15
16
17
18
20
Partnership Flip Illustration
Operation
Project Development
800.00
Project Construction
Project Operation
Developer Tax Equity Investor Lender
700.00
600.00
500.00
400.00
300.00
200.00
Lender Provides Debt
Debt Payments are Fixed
100.00
-
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation 19
Construction
Development
Development
Development
Pre-Development
Years
1
Pre-Development
2
3
4
5
Development
6
7
Construction
8
9
10
11
12
13
14
15
16
17
18
20
Partnership Flip Illustration
Operation
Financial Players in a Project
• Project Developer • Lender • Investor
TRIBAL COMMUNITY
• Renewable Resource Owner
• Off-taker (power purchaser)
17
Project Development
800.00
Project Construction
Project Operation
Developer Tax Equity Investor Lender
700.00
600.00
500.00
Lender Renewable Resource Owner Long Term Off-taker
400.00
300.00
200.00
Developer Community Scale
100.00
-
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation
Operation 19
Construction
Development
Development
Development
Pre-Development
Pre-Development
Development
Construction
Investor Commercial Scale
14 15 16 17
Years
1
2
3
4
5
6
7
8
9
10
11
12
13
18
20
Operation
Case Example – Project Development
• The Campo Band of Mission Indians of the Kumeyaay Nation has a successful wind project and is working on another. • Largest commercial wind facility in Indian Country. 50 MW project with 25 turbines constructed in 2005, online in 2006. • Tribe is compensated for use of land and capture of renewable energy resources. • Project Finance: Tax equity • Tribe now negotiating 160 MW project comfortable to pursue greater participation.
Source: La Chappa, M. and Estes, M. (November 2011). “Renewable Energy: Security, Independence, and Economic Development.” Presented at the DOE Tribal Energy Program Review Meeting. http://apps1.eere.energy.gov/tribalenergy/pdfs/re_dev_campo_wind_estes.pdf. Photo from Campo Band of Mission Indians of the Kumeyaay Nation, NREL/PIX 16548.
Case Example – Self Sufficiency
PROJECT: The Yocha Dehe Tribe is collaborating with UC Davis and the local community on the Capay Valley Energyshed project, which will evaluate current energy usage valley-wide and assess the potential for an increased use of renewables. Almost 20% of Cache Creek Casino Resort’s peak energy demand is supplied by onsite generation of energy from the solar array and fuel cells. MARKET BARRIER: Energy independence TRIBE’S ROLE: Owner, developer, Off-taker TRANSACTION SUMMARY: The Tribe participates in PG&E’s Base Interruptible Program, which means the resort will completely disconnect from the utility power source. OUTCOME: The Tribe will produce its own energy from generators whenever PG&E needs more energy to meet peak demand. This program reduces the need to build new power plants.
Source: “Energy.” Yocha Dehe Wintun Nation. http://yochadehe.org/land-resources/sustainability-initiatives/en. Photo by Steve Wilcox, NREL/PIX 15550.
Case Example – PPA Third Party Financing PROJECT: Boulder County, Colorado, exercised a third-party PPA option by making investments to lower solar project costs.
Project Name Size (DC) Type Developer Owner PPA Terms Boulder County Solar Project 615 kW; 570 kW rooftop, 45 kW ground Bella Energy Rockwell Financial 20 years, fixed-price 6.5 ¢/kWh for first 7 years, renegotiate price and buyout option at beginning of year 8
MARKET BARRIERS: Cost of electricity; price stability; energy demand and net-metering
LOCAL GOVERNMENT ROLE: Sponsor, investor/financier, off-taker TRANSACTION SUMMARY: This structure takes advantage of a government entity’s ability to issue tax-exempt debt or to tap other sources of funding to buy down the cost of the project. POTENTIAL OUTCOME: Pre-payments can improve economics for both parties and provide greater price stability over the life of the contract.
Source: “Power Purchase Agreement Checklist for State and Local Governments.” (October 2009). Published by NREL. http://www.nrel.gov/docs/fy10osti/46668.pdf.
Case Example - PPA Third Party Financing
PROJECT: Denver International Airport (DIA) installed a 2-MW solar array to provide up to half of the electricity to power the people mover transit system. Project Name Size (DC) Type Denver Airport Solar Project 2,000 kW; Ground-mount, singleaxis tracking
MARKET BARRIERS: Cost of electricity; price stability; construction risks
GOVERNMENT ROLE: Sponsor, off-taker TRANSACTION SUMMARY: MMA Renewable Ventures financed and owns the project and sells the electricity it produces to the airport under a longterm power purchase agreement. OUTCOME: DIA reduced electricity costs; Xcel Energy uses the RECs to fulfill its state renewable energy obligation by 2020; MMA Renewable Ventures sells the RECs to Xcel; receives a rebate from Xcel; receives a large tax federal break; and generates guaranteed revenue from the electricity the array produces.
Sources: “Power Purchase Agreement Checklist for State and Local Governments.” (October 2009). Published by NREL. http://www.nrel.gov/docs/fy10osti/46668.pdf. “Green Wombat”. (October 2007). Published by Todd Woody. http://thegreenwombat.com/2007/10/01/denver-airport-goes-solar/.
World Water & Solar Developer Technologies Owner MMA Renewable Ventures
25 years, fixed-price 6 PPA Terms ¢/kWh for first 5 years, buyout option at beginning of year 6 or price increases to 10.5 ¢/kWh
THANK YOU
Contact: Robert Springer [email protected]
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