Public power utilities use creative financing models to support renewables
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.
Please Sign in to rate this.
Senior Vice President, Publishing
Jeanne Wickline LaBella
Editor, Public Power Daily
Fallon W. Forbush
Manager, Integrated Media
David L. Blaylock
Integrated Media Editor
- California prices increasingly mimic ‘duck curve,’ EIA says
- Senate panel opposes sale of PMA assets, bolsters cybersecurity agreement
- NYPA power line project to boost reliability, facilitate renewables
- Palo Alto Utilities thermal microgrid project funded through DEED grant
- House passes pipeline review, electric transmission bills
- Officials urge public power utilities to be prepared for cyberattacks
- Public power utilities recognized for high customer satisfaction
- Lawmakers hear about capacity market flaws, rising grid costs
- Report sees more than seven million plug-in EVs in U.S. by 2025
- Cyber Hygiene: Preventive Care to Avoid Electric System Decay