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Financing for community wind and solar project development

Financing for community wind and solar project development

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Community energy, and in particular, community wind and solar, has experienced significant growth in recent years. The main challenge to further expansion and implementation of community renewable energy projects is the high capital costs associated with project development. This chapter will present case studies of community wind and solar financing and include innovative mechanisms such as lease financing, sales of renewable energy credits, crowdfunding, and unconventional loan strategies. Through compilation of these cases, the objective is to provide prospective small renewable energy developers options as to how they can go about financing their projects and ultimately empower communities to independently produce energy while reducing greenhouse gases. Community energy, in particular, community wind and solar, has experienced significant growth in recent years. Driving this trend is the desire for communities to become energy self-sufficient and more environmentally conscious. Benefits of community wind and solar extend to include increasing community capacity, empowering residents, and promoting energy efficiency and conservation. The main challenge for further expansion and implementation of community renewable energy projects is the high capital costs associated with project development. With initial costs representing approximately 70 percent of the life cycle costs of the project [1], it can take several years to recoup this investment and can impede the ability of local developers to raise enough capital. Small utility-scale wind power projects have provided proving grounds for new technology and innovative financing structures. Historically, financing of community wind projects has generated innovative structures that were later adopted by the broader wind market and are now popular mainstream financing structures, such as the special allocation partnership flip structure [2]. More recently, community wind projects have been financed with creative structures that capitalize on incentives and make use of public market capital. Community solar is a popular community energy choice due to the scalability of projects. Small communities and neighbourhoods can pursue solar energy more easily by selecting the number of panels required to suit their needs. Community solar has relied on three main financing structures: utility-sponsored, special-purpose entity, and non-profit, to implement projects of various scales and make use of available incentives. Despite many community wind and solar projects achieving financing success, there are challenges in replicating the elements of some of these deals. Some of the cases only work in the exact circumstance presented due to specific incentive availability or legalities in different areas. Also, since these proposed structures are new to the industry, transaction costs may be high due to the learning process of executing these deals and development of the financing package could be lengthy for the same reason. This chapter will present case studies of community wind and solar financing and include innovative mechanisms such as lease financing, sales of renewable energy credits, crowdfunding, and unconventional loan strategies. Through compilation of these cases, the objective is to provide prospective small renewable energy developers options as to how they can go about financing their projects and ultimately empower communities to independently produce energy while reducing greenhouse gases. These examples serve as encouraging case studies for other community projects looking for ways to raise capital and make use of programmes and incentives to piece together a financial package. Furthermore, the cases presented have the potential to extend beyond community projects to commercially renewable energy project finance.

Chapter Contents:

  • Abstract
  • 4.1 Introduction
  • 4.1.1 Community wind and solar – defined
  • 4.2 Benefits of community wind and solar
  • 4.3 Lessons from overseas
  • 4.4 Overview of available incentives and credits in North America
  • 4.5 Historical financing models
  • 4.5.1 Municipal wind
  • 4.5.2 Cooperatives (wind and solar)
  • 4.5.3 Private placements (wind and solar)
  • 4.5.4 Private equity (wind and solar)
  • 4.5.5 Multiple local owner (wind and solar)
  • 4.5.6 Flip structures (wind)
  • 4.5.7 On-site projects, behind the meter (wind and solar)
  • 4.5.8 Utility-sponsored model (wind and solar)
  • 4.5.9 Special-purpose entity (wind and solar)
  • 4.5.10 Non-profit model (solar)
  • 4.6 Innovative financing models – case studies of community wind
  • 4.6.1 Cases from the United States
  • 4.6.1.1 Case 1: PaTu Wind Farm, LLC
  • 4.6.1.2 Case 2: Projects resulting from MinWind
  • 4.6.1.3 Case 3: Ridgewind, Pipestone, Minnesota
  • 4.6.1.4 Case Study 4: Iowa – powering schools with wind
  • 4.6.1.5 Case 5: Crow Lake Wind Project, South Dakota
  • 4.6.1.6 Case 6: Hale Community Wind, Texas
  • 4.6.2 Cases from Canada
  • 4.6.2.1 Case 7: Millbrook Community Wind and Truro Heights Community Wind Projects, Nova Scotia
  • 4.6.2.2 Case 8: Box Springs Wind Farm, Alberta
  • 4.6.2.3 Case 9: Frampton Community Wind, Quebec
  • 4.6.2.4 Case 10: WindShare, Ontario
  • 4.6.2.5 Case 11: Gunn's Hill Wind Farm and the Oxford Renewable Energy Co-operative
  • 4.6.3 Discussion on replicability and challenges
  • 4.7 Innovative financing models – case studies of community solar
  • 4.7.1 Cases from the United States
  • 4.7.1.1 Case 1: Sacramento Municipal Utility District – SolarShares Program
  • 4.7.1.2 Case 2: University Park Solar, Maryland
  • 4.7.1.3 Case 3: Boardman Hill Solar Farm (BHSF)
  • 4.7.1.4 Case 4: Solar for Sakai, Washington (Non-profit)
  • 4.7.1.5 Case 5: Clean Energy Collective (CEC)
  • 4.7.1.6 Case 6: Solar Pioneers II, Oregon (Utility-Sponsored)
  • 4.7.1.7 Case 7: Fort Dix, New Jersey (Crowdfunding)
  • 4.7.1.8 Case 8: Elsie Whitlow School, Washington, DC [Property Assessed Clean Energy Program (PACE)]
  • 4.7.2 Cases from Canada
  • 4.7.2.1 Case 8: Drake Landing, Alberta
  • 4.7.2.2 Case 9: SolarShare Canada
  • 4.7.2.3 Case 10: Solar Portfolio in Ontario, Canada
  • 4.7.3 Discussion on replicability and challenges
  • 4.8 Summary and conclusions
  • References

Inspec keywords: financial management; energy conservation; wind power; solar power; life cycle costing; project management

Other keywords: solar financing; innovative mechanisms; public market capital; greenhouse gase reduction; renewable energy project finance; utility-sponsored special-purpose entity; learning process; community capacity; transaction costs; community renewable energy projects; capital costs; solar energy; innovative financing structures; wind market; community energy; community wind financing; special allocation partnership flip structure; renewable energy credits; crowdfunding; life cycle costs; unconventional loan strategies; energy efficiency; community wind project development; solar project development; small utility-scale wind power projects; energy conservation; financial package

Subjects: Solar energy; Energy and environmental policy, economics and legislation; Energy resources; Wind energy; Power system management, operation and economics

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