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financing, ownership models
Financing and Development Models
Corporate structure (i.e. partnership vs. limited liability corporation) and ownership structure (i.e. how many owners, allocation of equity, and how the structure may change over time) together determine a range of important project variables, including access to and cost of capital, risk allocation, ability to use tax incentives, amount of local investment, and complexity of the project. Given the importance of these factors, careful consideration should be given to available options and the benefits and costs of each.
While the range of possible ownership and financing structures is wide, the decision of which to use rests on relatively few considerations. We have targeted this website to community wind projects, therefore, our discussion focuses on those possible ownership and financing options that appeared to be the best fit for this type of project at the time this website was developed.
Our primary focus will be on either multiple-owner models that are shaped to take advantage of the Federal Production Tax Credit and the Modified Accelerated Cost Recovery System (MACRS) of Accelerated Depreciation, or public ownership models that can use tax-exempt financing such as the new Clean Renewable Energy Bonds (CREBs). We will not cover individual ownership or project lease approaches, but good information on these methods is available through the Environmental Law & Policy Center.
Financing Models
Financial modeling may well be the single most critical analysis of a wind project. Project coordinators should seek expert advice and direction early in project development. We have included an Expense Example spreadsheet, but caution that project coordinators should not assume their project will have the same costs. Recent substantial turbine price increases demonstrate how quickly costs can change. We have not included sample pro formas, given the unique characteristics of each wind project, we instead recommend that project coordinators research and use available financial modeling tools (in addition to securing expert assistance). Here are several examples:
http://www.windpower.org/en/tour/econ/econ.htm
http://www.retscreen.net/ang/menu.php
http://analysis.nrel.gov/windfinance/login.asp
http://www.windustry.com/calculator/default.htm
