Tax incentives, renewable portfolio standards, and the creation of renewable-energy credits and carbon constraints are no longer separate considerations when assessing renewable-energy projects....
Renewables attract utility investment dollars.
who own their own facilities. The future portfolio will include all these ownership structures. That’s what it’s going to take to achieve the goals the policy makers have set.
Stoering, Xcel: The policy changes certainly help project economics and ultimately benefit our customers. But it hasn’t changed our plans much. We’ve got an ambitious state RPS, proximity to great renewable resources, and we’ve built a system to access those resources. Gas is on the margin in our market, and that allows us to take advantage of renewable resources.
We see solar energy as an emerging priority. At Public Service Company of Colorado, we have RFPs outstanding that target solar specifically, with carve-outs for PV or concentrated solar with potentially some type of thermal storage. Bids were due April 10 and we’re excited to see how those bids do in this environment.
Fortnightly: How has the credit crunch affected your outlook for financing renewable power projects?
Kuga, PG&E: In spite of the financial crisis, projects that are far along in the permitting and development process are able to secure financing and get built. In the last four months, four projects for which we signed PPAs became operational and started delivering power to our system. So there hasn’t been an absolute shut-out of projects.
With respect to PG&E, the tight credit market has affected everyone. We’ve been able to access financing with some tightness. Recently we’ve seen some loosening of the credit markets, although it’s nowhere near where we’d like to have it. We don’t see the financial situation as an impediment to moving forward, and our access to credit markets should continue.
Stoering, Xcel: Nobody is immune. Capital formation is restrictive and expensive. In the tax-equity investment market, investors are scarce. But there is relief in sight for a few projects. The Treasury Department’s grant program and the DOE loan-guarantee program both allow more attractive financing, so projects don’t have to rely as much on tax-equity investors. We’re waiting to see how they work.
Smith, Duke: Our capital position is sound and we have funds available that we can use to make direct investments in renewable energy. Also we still have the tax appetite at the federal and state levels to take advantage of the tax credits.
Dickson, Duke Gen: It’s changed our business slightly, maybe less so than other pure-play wind development companies who rely on project finance and tax equity. Duke is uniquely positioned with a strong balance sheet, investment-grade credit ratings and a large tax appetite. We’re in a good position to utilize the non-cash aspects of these assets. We’ve been impacted less than pure-play independent development companies. We’ve had to focus harder on project particulars, financeability aspects. It involves belt-tightening around the business to make sure we’re doing things in an efficient manner.
To date we’ve been financing projects on the balance sheet, and that gives us the opportunity to go to market when the time is right, when conditions are right, for a portfolio of assets. That gives us an advantage over others. We can sit and