Financing Wind Power

According to New Energy Finance wind analyst Tyler Tringas, new build asset financing for wind projects was down 52 percent globally in the first quarter of the year. Total activity was slightly down quarter-over-quarter in the second quarter, at $11.6 billion.

“In the U.S., we expect loan activity to increase over the next 12 months,” said Tringas. “The credit crisis effectively broke down the so-called ‘tax equity’ financing structures that financed the majority of new wind projects in the past.”

The American Recovery and Reinvestment Act (ARRA) provided a possible solution for the problem by allowing the Treasury Department to issue grants for 30 percent of the cost of new renewable energy projects. That, along with a loan guarantee program by the Department of Energy, should spur lending activity after what has been a basically frozen 2009.

“Now that the first sets of rules have been issued, the reaction has been generally positive, with several new wind financings closing just days after the announcement,” said Tringas. “Banks, which avoided new lending this year, seem generally eager to deploy new capital into the renewables sector.”

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