A week after Texas tycoon T. Boone Pickens announced he was pulling back from plans to build a massive turbine farm, two new financing deals for wind energy have surfaced, raising hopes that banks are renewing their support for renewable power.
But the new investments announced this week are being spearheaded by foreign concerns as some executives worry that the largest U.S. banks still seem to be shying away from backing wind development as they wait for the Department of Energy to clarify loan guarantees and other incentives.
Yesterday, First Wind, a Massachusetts company operating large wind stations in the Northeast and Hawaii, announced it had secured two loans to expand its operations. That announcement comes a day after Terra-Gen Power said it had successfully secured first-phase funding for a massive project in California.
First Wind said two lenders, HSH Nordbank of Germany and the Alberta Investment Management Corp., a Canadian pension fund, will provide $191 million in total for operations in New York and for the giant Stetson wind power plant in Maine. The company said the deals were scored on their own merits with government incentives playing no role.
"This is not related at all to the stimulus package, and it also doesn't have a tax financing or tax equity component to it," said Paul Gaynor, CEO of First Wind.
The Alberta investors group will lend $115 million over eight years, with HSH Nordbank extending a one-year, $78 million loan to help the company grow. The money will allow First Wind to add an additional 25.5 megawatts of generating capacity to Stetson, which is now running at about 57 megawatts.
First Wind's financing arrangement comes on the heels of the deal for Terra-Gen, which is building one of the world's largest wind facilities in Southern California.
That company said it closed on a deal with a consortium of three lenders, netting it $115 million to begin purchasing 100 1.5-megawatt General Electric Co. wind turbines to eventually be installed at the Alta Wind I project. Terra-Gen said 150 MW of capacity will be just the first phase in the development of the Alta Wind Energy Center, which the company envisions will eventually generate up to 3,000 MW of wind power to feed the surrounding urban areas.
Two U.S. concerns are backing Terra-Gen's $115 million loan, Prudential Capital Group and CIT, a New York-based middle market investment group. But the lead arranger for the deal is Calyon, the investment arm of the French bank Credit Agricole.
Terra-Gen said the Alta project is underpinned by a contract it already has to sell 1,550 MW of renewable energy to Southern California Edison Co., whereby the company "will transport power from the Tehachapi area to Southern California via SCE's Tehachapi Renewable Transmission Project."
First Wind CEO Gaynor said he is not surprised that European banks are still the main drivers behind these latest offers of financing for wind's expansion in the United States.
"With a few exceptions, U.S. banks have never really been large participants in the U.S. wind market. It's historically been driven by European banks," Gaynor said. "We're optimistic that they become more relevant players in the U.S. wind space. I think a lot of banks are waiting to see what comes out of D.C. on the loan guarantee side before they formally decide how they're going to go after that market."
First Wind is already generating 274 MW of wind power in the United States, 125 MW from power plants in upstate New York. The company is poised to launch another 54 MW facility there and said it hopes to add another 300 new megawatts of wind power in New York. Other expansion plans are in the works for New England, the Southwest, the Pacific Northwest and California. Terra-Gen said it owns some 830 MW of renewable generation capacity throughout the West.
Rob Gramlich, senior vice president for public policy at the American Wind Energy Association, said the recent release of details on grants from the economic stimulus package by the Treasury Department replacing tax credits is sparking new activity in wind, and more deals are expected.
"Even companies that were not necessarily thinking of using the grant needed to see what the program would look like in order to evaluate that option" relative to tax credits, said Gramlich. "Now they've seen quite a bit of detail, and in many cases enough to make a comparison and proceed with the option of their choice." By Nathanial Gronewold, E&E reporter |
