2013 Renewable Energy Power Award Financial Innovation

Winner

Burgess BioPower LLC

Developer: Cate Street Capital Inc.
Berlin, N.H.

Burgess BioPower LLC
Photo: Courtesy of Cate Street Capital Inc.
An aerial view of Burgess Biopower, a 75MW biomass power plant in Berlin, N.H.

The winner of the 2013 Financial Innovation Award is Cate Street Capital Inc. for developing Burgess BioPower LLC in Berlin, N.H. Burgess BioPower, a $300 million project, is a state-of-the-art 75MW biomass power plant redeveloped from a shuttered pulp mill. Cate Street Capital Managing Director Alex Ritchie says the power plant will reduce emissions of nitrous oxide by 75 percent, mercury by 90 percent and sulfur dioxide by 98 percent when compared to a coal-fired plant. 

Cate Street Capital successfully navigated a complex financing structure and combined multiple funding sources. The Burgess BioPower project received $150 million in senior fixed-rate notes, $50 million in floating-rating notes, $55 million in a monetized Section 1603 cash grant bridge loan, $17.5 million from a new markets tax credit (NMTC) allocation and additional funds provided by developer equity. Although using NMTCs added to the complexity of the financing structure, it leveraged significant low cost funds and strong monetization attributes. 

Cate Street Capital was also able to offset some risk by creating two key long-term agreements. Burgess BioPower negotiated a 20-year power purchase agreement with the Public Service of New Hampshire (PSNH), the state’s largest utility, to help it meet its obligations under the state’s Renewable Portfolio Standard (RPS). This mutually beneficial agreement, which provides power pricing to Burgess BioPower while obligating the sale of renewable energy credits (RECs) to PSNH, was critical to financing the project. Burgess BioPower also negotiated a long-term biomass supply contract, which enables the project to secure 750,000 tons of biomass annually to ensure the facility would operate at capacity during the duration of the PPA. 

Ritchie says Burgess BioPower will have a positive impact on the Berlin community by creating hundreds of direct and indirect jobs. The project will also create long-term social and community benefits through a community benefits agreement (CBA), established as part of the financial transaction. The CBA facilitates local economic development through a $2.75 million fund, which will specifically target the region’s forestry and infrastructure industries.

Congratulations to Cate Street Capital for using an innovative financing structure to provide long-term benefits to the community of Berlin, N.H.

“Biomass is the hardest renewable to finance. [I] like the use of NMTC and 1603, and re-generation of an existing plant,” said Ed Feo, a 2014 Renewable Energy Power Awards judge.

Honorable Mention

Harbor Wind LLC
Photo: Courtesy of AMCREF Community Capital
The 9MW Harbor Wind power generation facility comprises six turbines in Corpus Christi, Texas.

Harbor Wind LLC

Developer: Revolution Energy LLC
Corpus Christi, Texas

The honorable mention for the 2014 Financial Innovation Award is presented to Revolution Energy LLC for developing Harbor Wind LLC, a 9MW six-turbine wind power generation facility located in Corpus Christi, Texas.

A number of factors prevented Revolution Energy from obtaining traditional financing, so they collaborated with AMCREF Community Capital, United Fund Advisors and Kutak Rock for three years to create an innovative financing structure that combined $11 million of AMCREF’s NMTCs with the Section 1603 cash grant. This financing structure enabled the project to close its funding gap in 2011.

Susan Seagreen, director of AMCREF Community Capital, the lender for the project, says Harbor Wind LLC generates 29,500 MWh of electricity a year, and annually offsets 16,000 tons of CO2 and saves more than 22.5 million gallons of water annually.

“The project did not obtain traditional project financing and … was the developer’s first. [It] was also selling its power on a merchant basis with no firm power purchase agreement [and] used NMTCs,” said Yuri Horwitz, a 2014 Renewable Energy Power Awards judge.

Honorable Mention

Naval Air Weapons Station (NAWS) China Lake
Photo: Courtesy of SunPower Corp.
This 13.78MW solar power system - the U.S. Navy’s largest - is located at the Naval Air Weapons Station (NAWS) China Lake in California.

Naval Air Weapons Station (NAWS) China Lake

Developer: SunPower Corporation
China Lake, Calif.

The second honorable mention for the 2014 Financial Innovation Award is presented to SunPower Corporation for developing the Naval Air Weapons Station (NAWS) China Lake project in California.

The Department of Defense is pursuing aggressive renewable energy goals, but historically large solar projects have been challenging to finance because Federal Acquisition Regulations previously prevented 20-year contracts between the government and private entities. However, SunPower collaborated with the U.S. Navy and Metlife to develop a 20–year federal power purchase agreement (PPA) below retail rates. This agreement benefited MetLife by giving them access to the solar tax credits and accelerated depreciation, while allowing the U.S. Navy to avoid any initial, upfront expenses associated with developing a solar power system.

As of 2012, the solar system has provided NAWS China Lake with more than 30 percent of its annual electricity needs. David McIlhenny, senior director at SunPower Corporation, says the solar system could save the Navy more than $13 million in the next 20 years.

“[First] of a kind endeavor for the Navy under a new program,” said Jim Howard, a 2014 Renewable Energy Power Awards judge.

Honorable Mention

SunEdison California Department of General Services Transactions
Photo: Courtesy of SunEdison
This 1.4MW solar PV power generation facility at the California State Prison, Solano, is one of five such facilities on state prisons and hospitals throughout California that make up the SunEdison California Department of General Services Transaction.

SunEdison California Department of General Services Transactions

Developer: SunEdison
Wasco, Kern County Calif.; Coalinga, Fresno County, Calif.; Corcoran, Kings County, Calif.; Vacaville, Solano County, Calif.

The third honorable mention for the 2014 Financial Innovation Award is presented to SunEdison for the SunEdison California Department of General Services Transactions development. The project consists of five solar PV power generating facilities on five state prisons and hospitals located throughout California. The facilities are financed through a 20-year term solar power purchase agreement (PPA), which requires no upfront capital from California state taxpayers and helps reduce the electricity cost of state facilities.

With the help from financing partners including Nationwide Life Insurance Company, the tax equity investor, and National Bank of Arizona, the project lender, SunEdision was able to use a levered lease-passthrough structure to facilitate distributed solar generation. According to SunEdison, in addition to providing taxpayer savings, this project will generate significant savings for the state. Because its management and operations capabilities are designed to ensure high performance over the next 20 years, SunEdison will be allowed to use its expertise to help reduce energy costs and environmental footprint while facilitating long-term planning for its community and customers.

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