Renewable Energy Tax Credits News Briefs - February 2011

Tuesday, February 1, 2011

Rep. Lloyd Doggett, D-Texas, reintroduced a bill in January to establish an investment tax credit for waste-to-energy facilities. H.R. 66, the Waste-to-Energy Technology Act of 2011, is an updated version of H.R. 5856, which Doggett introduced in July 2010. The proposal would provide $1 billion in investment tax credits for qualified waste-to-energy facilities, which are defined as properties comprising a system that uses municipal solid waste or municipal sewage sludge as the feedstock for producing certified solid, liquid or gas fuel. A copy of the bill and links to related information can be found online at www.energytaxcredits.com.

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The U.S. Department of Energy (DOE) finalized a loan guarantee for Abengoa Solar Inc.'s Solana project, the world's largest parabolic trough concentrating solar plant. Located near Gila Bend, Ariz., the 250-megawatt (MW) project is the first large-scale solar plant in the country capable of storing the energy it generates. Solana is expected to produce enough energy to serve 70,000 households. The developer, Abengoa Solar Inc., estimates that the Solana project will create as many as 1,700 construction jobs and more than 60 permanent jobs. In addition, a mirror manufacturing facility will be built near Phoenix to accommodate the project's need for more than 900,000 mirrors, creating additional direct investment in Arizona's economy. More information about DOE's investment in the Solana project is available at www.lpo.energy.gov.

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GE Energy Financial Services announced in December that it had reached its multi-year target of building a $6 billion renewable energy investment portfolio by the end of 2010. Renewable energy now comprises nearly 30 percent of its portfolio, up from 6 percent in 2006, the company said. In 2009 and 2010, the business unit invested or committed more than $1.5 billion to wind farms, closed transactions in geothermal and hydroelectric power generation and made venture capital investments in smart grid and renewable energy companies. GE also said its research has shown that investments in the wind industry have risen and fallen with the renewal and expiration of renewable energy incentives. Specifically, GE said the expiration of incentives in 2000, 2002 and 2004 caused a 76 to 90 percent drop in installed capacity from the previous year.

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Caithness Energy LLC and GE Financial Services secured a $1.3 billion financing package for the Shepherds Flat wind project located near Arlington, Ore. The loan carries an 80 percent guarantee from the DOE. Shepherds Flat is the sixth clean energy project to complete a loan guarantee offer under the American Recovery and Reinvestment Act and the largest project to date. Once complete, the 338-turbine, 84-MW wind farm will cover 30 square miles and is projected to be the largest land-based wind project in the world. The final debt package consisted of $525 million in fixed-rate bonds, $675 million in loans and $230 million in letters of credit. The sponsor contributed roughly $700 million in equity. All the power and renewable energy tax credits generated will be sold to Southern California Edison through a 20-year power purchase agreement. The Shepherds Flat project is slated for completion in 2012.

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Ormat Nevada, an Ormat Technologies subsidiary, has engaged John Hancock Life Insurance Company to arrange construction and term loan facilities for three geothermal projects in various stages of development. The three projects are the Mammoth CD-4 and Wister projects in California and the Deadhorse Wells project in Nevada. Ormat Nevada stands to receive a DOE loan guarantee of as much as $330 million; the energy company and John Hancock have submitted the first part of the loan guarantee application. Ormat said the process will continue with DOE and John Hancock's due diligence, followed by a conditional financing commitment, completion of documentation and close of financing. Combined, the projects are expected to generate between 80 and 90 MW when they come online in 2013.

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