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Public power utilities use creative financing models to support renewables

From the June 27, 2013 issue of Public Power Daily

Originally published June 27, 2013

Financing a renewable power project is not as easy for public utilities as it is for other entities; options such as long-term power purchase agreements and federal incentive programs may be off the table.

As a result, public utilities throughout the United States are using nontraditional models to finance renewable projects with great success, writes Alice Clamp in a new Public Power magazine article.

Knoxville, Tenn., used a public-private financing model to support the necessary up-front investment in a solar photovoltaic system. The city contributed a $200,000 U.S. Department of Energy grant and a third-party developer provided the rest of the funding.

"We’re trying to be a leader in renewable energy," Jake Tisinger, a project manager in Knoxville’s sustainability office, told the magazine. "And we want other cities to use our third-party model." But there are variations on that theme, he noted. "Cities should think creatively. There’s no one right or wrong answer."

In Cowlitz County, Wash., a looming renewable portfolio standard led the Public Utility District to explore renewable power options. Cowlitz County PUD teamed up with three other public utilities to sponsor a 205-MW wind farm in Klickitat County.

"Cowlitz played a leading role organizationally and had the largest financial interest in the project," said David Domansky, a partner with Bracewell & Giuliani who helped structure the deal.

The utilities—Klickitat PUD, Lakeview Light & Power and Tanner Electric Cooperative as well as Cowlitz—financed the prepayment on their balance sheets, with the two PUDs issuing general obligation bonds and the two co-ops using commercial bank loans. They also acquired the land for the wind farm and signed a purchase agreement with the turbine supplier, making a substantial down-payment on the turbines, said Domansky.

Two institutional investors served as tax equity investors and a bank provided 100 percent of the construction cost.

Read more about the innovative financing mechanisms employed by public utilities for renewables projects in the article, "Smart Money for Renewables," on

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