GTM Research (Cambridge, Massachusetts, U.S.) and Mintz Levin Law Firm (Boston, Massachusetts, U.S.) have published an analysis of project financing trends for utility-scale renewable energy power projects in the United States, stating that with the expiration of key subsidies the expected supply of project financing will not be able to meet demand.

"Renewable Energy Finance in the U.S.: 2010-2013 Overview and Future Outlook" anticipates 22 GW of utility-scale U.S. solar photovoltaic (PV) and concentrating solar power (CSP) projects will seek USD 76.6 billion in project financing through 2013, but that only 15.7 GW of these projects will actually achieve USD 54 billion in financing.

"Nearly three years since the onset of the financial crisis, the availability of project financing to renewable energy projects in the U.S. has improved somewhat due to the thawing of the lending markets and the passage of the Recovery Act Programs," states the report.

"However, considerable uncertainty remains as the industry awaits final word on the potential extension of the Section 1603 Cash Grant Program now, the PTC for wind in 2012, and as tax equity markets continue their tenuous rebound from their historically low, recessionary depths."


Expiration of Section 1603 program a major blow to the industry

The report notes that since the fourth quarter of 2008, U.S. renewable power projects' ability to secure both equity and debt project financing has fallen sharply due to disruptions in global financial markets.

The report also notes that from 2009-2011 the Section 1603 program, also called the Treasury Grant Program, provided "significant liquidity" to renewable project developers, with USD 1.5 billion in cash grants claimed for solar projects.

Projects supported by the Section 1603 program included the 75 Martin Next Generation concentrating solar power project and the 35 MW DeSoto NG & Space Cost projects, both developed by Florida Power & Light Company (Juno Beach, Florida, U.S.). However, this program expired at the end of 2011, which the report expects to have a significant impact.


Projects with greater risk may not access financing

The report also looks at the role of other programs including the U.S. Department of Energy's loan guarantee program and the production tax credit for wind technologies.

Overall, the report states that larger, stable projects from established developers should be able to access project financing at reasonable terms over the next several years, but that retrenchment in financing markets are likely to limit financing for projects from less-established developers, and projects with higher technology or development risks.

2012-01-30| Courtesy: Mintz Levin, GTM Research | solarserver.com © Heindl Server GmbH

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