A Nice Problem to Have
The story at renewable energy events in recent months has been that the project finance market that froze up last year is finally thawing, but only a few banks are active in the market. In many cases, the thaw seems to be very slow. The mantra seems to be that the only the very best projects have a relatively easy time getting financed.
So when I saw that one recent project announcement said the developer not only lined up lenders, but was oversubscribed with eight sponsors, it was worth a closer look.
Maryland-based CPV Renewable Energy Company, an affiliate of Competitive Power Ventures, Inc., is that developer. It recently closed on financing and will soon begin construction on the 152-megawatt Keenan II wind farm near Woodward, Oklahoma. The project is scheduled for completion by year's end. It is the second phase of a multi-phased wind generation project with a total build-out potential exceeding 400 megawatts.
"If your company brings the right project to the table, you'll find that the market will respond with proper financing," said Sean Finnerty, CPV senior vice president. So I asked how that affects relations with lenders who want "in" and may not get as much action as they hoped.
"It's still an attractive project, so they all have a position in it that is a little less than they might have originally wanted," Finnerty added.
The lenders are: The Bank of Tokyo-Mitsubishi, Union Bank, Key Bank, Helaba, LBBW, Natixis, ING, and Rabo Bank. Not an all-American list by any stretch, but wind development rarely has used one.
"We're looking to develop a roster for future projects. and not play one off against the other now," Finnerty said.
That looks like a formula that will hold CPV in good stead as it move forward with another 305 megawatts in signed power purchase agreements over the next two years and a development pipeline of 10,000 megawatts.
Another quirk worth noting is that GE Energy Financial Services will provide tax equity for the project, but Keenan II will consist of 66 Siemens 2.3 megawatt turbines.
The project has secured a 20-year power purchase agreement with Oklahoma Gas & Electric Company. Finnerty also pointed out that the project is being done in Oklahoma, a high-wind state that doesn't have a state renewable portfolio standard. The project was competitively bid.
And with more to come, CPV has an active list of possible lending partners.
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