A Review of Wind Project Financing Structures in the USA
Abstract
The rapid pace of wind power development in the U.S. over the last decade has outstripped the ability of most project developers to provide adequate equity capital and make efficient use of project-related tax benefits. In response, the sector has created novel project financing structures that feature varying combinations of equity capital from project developers and third-party tax-oriented investors, and in some cases commercial debt. While their origins stem from variations in the financial capacity and business objectives of wind project developers, as well as the risk tolerances and objectives of equity and debt providers, each structure is, at its core, designed to manage project risk and allocate federal tax incentives to those entities that can use them most efficiently. This article surveys the six principal financing structures through which most new utility-scale wind projects (excluding utility-owned projects) in the U.S. have been financed from 1999 to the present. These structures include simple balance-sheet finance, several varieties of all-equity special allocation partnership 'flip' structures, and two leveraged structures. In addition to describing each structure's mechanics, the article also discusses its rationale for use, the types of investors that find it appealing and why, and its relative frequency of use inmore »
- Authors:
- Publication Date:
- Research Org.:
- Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)
- Sponsoring Org.:
- Environmental Energy Technologies Division
- OSTI Identifier:
- 962718
- Report Number(s):
- LBNL-2058E
TRN: US200916%%351
- DOE Contract Number:
- DE-AC02-05CH11231
- Resource Type:
- Journal Article
- Journal Name:
- Wind Energy
- Additional Journal Information:
- Journal Volume: 12; Journal Issue: 3; Related Information: Journal Publication Date: April 2009
- Country of Publication:
- United States
- Language:
- English
- Subject:
- 29; 17; BUSINESS; CAPACITY; CAPITAL; FINANCING; MARKET; WIND POWER
Citation Formats
Bolinger, Mark A, Harper, John, and Karcher, Matthew. A Review of Wind Project Financing Structures in the USA. United States: N. p., 2008.
Web.
Bolinger, Mark A, Harper, John, & Karcher, Matthew. A Review of Wind Project Financing Structures in the USA. United States.
Bolinger, Mark A, Harper, John, and Karcher, Matthew. 2008.
"A Review of Wind Project Financing Structures in the USA". United States. https://www.osti.gov/servlets/purl/962718.
@article{osti_962718,
title = {A Review of Wind Project Financing Structures in the USA},
author = {Bolinger, Mark A and Harper, John and Karcher, Matthew},
abstractNote = {The rapid pace of wind power development in the U.S. over the last decade has outstripped the ability of most project developers to provide adequate equity capital and make efficient use of project-related tax benefits. In response, the sector has created novel project financing structures that feature varying combinations of equity capital from project developers and third-party tax-oriented investors, and in some cases commercial debt. While their origins stem from variations in the financial capacity and business objectives of wind project developers, as well as the risk tolerances and objectives of equity and debt providers, each structure is, at its core, designed to manage project risk and allocate federal tax incentives to those entities that can use them most efficiently. This article surveys the six principal financing structures through which most new utility-scale wind projects (excluding utility-owned projects) in the U.S. have been financed from 1999 to the present. These structures include simple balance-sheet finance, several varieties of all-equity special allocation partnership 'flip' structures, and two leveraged structures. In addition to describing each structure's mechanics, the article also discusses its rationale for use, the types of investors that find it appealing and why, and its relative frequency of use in the market. The article concludes with a generalized summary of how a developer might choose one structure over another.},
doi = {},
url = {https://www.osti.gov/biblio/962718},
journal = {Wind Energy},
number = 3,
volume = 12,
place = {United States},
year = {Wed Sep 24 00:00:00 EDT 2008},
month = {Wed Sep 24 00:00:00 EDT 2008}
}