Public Power Daily Logo

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 publicpower.org.

Subscriptions to the electronic and print editions of Public Power and all other APPA periodicals are free to all employees and governing board members of APPA member utilities and associate members. An online subscription signup form is on publicpower.org.


Ratings

Be the first to rate this item!

Please Sign in to rate this.

Comments

  Add Your Comment

(1000 of 1000 characters remaining)

Senior Vice President, Publishing 
Jeanne Wickline LaBella
202/467-2948
JLaBella@publicpower.org

Editorial Director
Robert Varela
202/467-2947
RVarela@publicpower.org

Editor, Public Power Daily
Jeannine Anderson
202/467-2977
JAnderson@publicpower.org

Communications Assistant
Fallon W. Forbush
202/467-2958
FForbush@publicpower.org

Manager, Integrated Media 
David L. Blaylock
202/467-2946
DBlaylock@publicpower.org

Integrated Media Editor 
Laura D’Alessandro 
202/467-2955 
LDAlessandro@publicpower.org