Renewable Energy Project Finance in the U.S.:
2010-2013 Overview and Future Outlook
Copyright © 2012 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
1 EXECUTIVE SUMMARY
The Mintz Levin law rm and GTM Research are pleased to provide an analysis o projectnancing trends or utility-scale renewable power projects and advanced project nancingbiouel reneries constructed in the United States, as well as orecasting the anticipatedsupply and demand levels sought through 2013.
1.1 Hindsight: 2010 & 2011
Since the ourth quarter o 2008, U.S. renewable power project’s ability to secure bothequity and debt project nancing dropped precipitously due to the systemic turmoilexperienced in the global nancial markets. As we approach the third anniversary o thateconomic crisis, the prospects or project nancing have improved considerably due toseveral market trends and signicant legislative policy support mechanisms:
Increased liquidity in the debt markets,
Lower costs o capital attributable toreduced debt spreads,
The availability o longer tenorsor term-debt,
The Payments or Specied EnergyProperty in Lieu o Tax Credits (2009Recovery Act, Section 1603 Cash GrantProgram “1603 Cash Grants”) originallyauthorized the American Recovery &Reinvestment Act,
The U.S. Departments o Energy &Agriculture’s Loan GuaranteePrograms, and
Emergence o Strategic Equity toSupplement Venture Capital and PrivateEquity Investments.
1.2 Foresight: 2012-2013
In orecasting capital markets and availability or renewable project developers seekingto secure non-recourse project nancing, the three (3) most dispositive actors impactinguture capital ormation trends will be:
The December 2011 expiration o the 1603 Cash Grants,
The December 2012 expiration o the Production Tax Credit (“PTC”) or wind, and
Macro-trends in tax equity nancing, which are highly correlated to the nancial health o alimited number o large nancial institutions.