Posted on January 8, 2013 by WILLIAM H. HOLMES on the Stoel Rives RENEWABLE+LAW blog.
In wake of the extension of the production tax credit, my colleague ED EINOWSKI has analyzed a key challenge - the relative scarcity of available utility-scale power purchase agreement RFPs. Having a PUC-approved PPA in place is generally a prerequisite for securing financing for utility-scale wind projects. Here's what he has to say:
The extension of the production tax credit (PTC) allows the wind energy industry to move forward with projects in 2013. But the last few years - especially 2012 - have seen relatively few utility-scale wind power purchase agreements executed. Without the assured revenue source of a power purchase agreement (PPA), wind projects will generally find third-party financing - whether debt, tax equity or cash equity - unavailable. And few developers - even those with the financial resources to do so - will likely be willing to risk proceeding with project construction in the absence of a financeable PPA. As a consequence, for most developers the PTC extension presents the immediate challenge of securing a financeable PPA to enable the PTCs to be secured. Given the time it generally takes to negotiate and finalize a utility-scale wind PPA as well as pursue other key items such as turbine supply agreements and engineering, procurement and construction contracts, it will be necessary to move expeditiously.
For a more detailed discussion of the issues involved, read the full article.
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