Utah, United States [RenewableEnergyWorld.com] Raser Technologies, Inc. announced the closing of the initial funding under a definitive agreement that provides project financing and tax equity capital for its 10-megawatt (MW) Thermo geothermal power project near Beaver, Utah. The funding arrangement provides non-recourse debt financing and tax equity capital to construct the Thermo geothermal power plant. Under this arrangement, the tax equity capital is provided by a tax equity partner in exchange for most of the tax benefits provided by the renewable energy project.
Approximately US $31 million of permanent non-recourse debt financing was provided to the Thermo project with a fixed annual interest rate of 7.00%. The agreement provides for Thermo to receive proceeds from the debt financing of approximately US $26 million for construction of the plant after an original issue discount of approximately US $5 million. After the effect of the original issue discount, the effective interest rate on the US $26 million in debt cash proceeds is 9.50%.
Approximately US $25 million of tax equity capital was provided for the tax benefits associated with the project, of which the tax equity partner will fund 15%, or approximately US $3.7 million, at the initial funding, with additional amounts to be funded as needed for construction, subject to customary ongoing representations and warranties. For more details on the funding, click here.
Raser has completed setting all of the first 50 geothermal generating units at the Thermo plant. The plant is on schedule and Raser expects to have the UTC Power PureCycle units producing power by October 2008, five months after holding a groundbreaking ceremony to begin the construction phase of the development.
Raser also announced that it was chosen to develop, in conjunction with Indonesia Power, more than 100,000 acres of geothermal resources to build an estimated 110 MW of geothermal power in West Java, Indonesia’s most populated island. The 412 square kilometers concession surrounds the Tangkuban Perahu volcano. Indonesia Power will hold 51% ownership in the venture with Raser, while Raser will own 49%.
“We are excited about working with Indonesia Power to expand our geothermal development,” said Brent Cook, Raser’s CEO. “We recognize their expertise in geothermal power operations and applaud their commitment to further develop Indonesia’s significant geothermal resources. We are honored to be their partner and look forward to working with them closely over the next several years.”