financing: models and opportunities
TRANSCRIPT
Financing:
Models and Opportunities Moderator: James Duffy, Nixon Peabody
Speakers: Tony Grappone, Novogradac & Company LLP Accounting and Financial Modeling
Chris Diaz, Seminole Financial Lending and Debt
Tal Mamo, United Wind Distributed Scale Leasing
National boutique leader providing financing for commercial renewable energy projects from $2 million to $30 million
Underwriting and servicing team with more than 50 years of experience in financing debt and tax credit equity transactions
Funded $300+ million worth of Wind and Solar Renewable Energy projects since 2009 (95 MW)
Focus on financing renewable energy systems that supply electricity to municipalities, school districts, and credit worthy commercial off-takers through Power Purchase Agreements
Seminole Financial Services
PROJECT AGGREGATION STRUCTURE Financing Smaller Transactions
ABC Project Owner
Project 1 Project 2 Project 3 Project 4 Project 5 Project 6
Master PPA with XYZ Offtaker (Corporation, Municipality, …)
Wind Project Phases
Phase I
• Site Selection
• Technology Selection
• Financial Model
• PPA
• Leases
• State Incentives
• Integrator Design
• System Design
• Scheduling
• Financing
• Permitting
• Physical Site
• Equipment
• Delivery and Installation
• Utility Review
• Permitting Authority Inspection
• Testing
• Maintenance
• Monitoring
• Repair
Site Review and Technology Selection
Phase II
Design and Planning
Installation Completing and Commissioning
Ongoing Operations
Phase III Phase IV Phase V Phase I
Underwriting Considerations Economic Viability / Financial Model:
o Source & Use
o Proforma
o Tax Credits / ITC Grant
Developer: o Track record
o Credibility
o Credit / Risk profile
Sponsorship: o Structure / Commitments
o Track record
o Risk profile
Contracts: o PPA / Lease
o Interconnection
o EPC turnkey contract
o O & M
Construction: o EPC Contractor experience
o Permitting / Zoning
o FAA Approval
o Air Quality Permits
Renewable Energy Resources: o Data / Verification
o Uncertainty
o Location
Technology: o Suppliers / track record
o Bankability
o Warranty
o Availability / Delivery timing
Revenue: o PPA structure (i.e., Security of revenue
Stream)
o Valuation: Appraisal / Cost Certification
o Renewable Energy Certificate (RECs)
Loan Security Interests / Title: o Assignments
o Ingress / Egress – Easements
o ALTA Survey
O&M / Asset Management: o Contractor / track record
o Spare parts
o Transmission
o Term
Financial Structure: Economic Viability
• Sources and Uses
• Loan Guarantees / Tax Equity Investors
• ProForma / Cash Flow
o Sale of Power (PPA)
o State Renewable Energy Certificates (REC’s)
• Programs (Construction and Perm Debt)
o 12 months Construction / 5 – 20 year long term debt
o Market Interest Rates
o LTV: 80% +/-
o Wind DSC: P99 = 1.00 dsc / P50 = 1.45 dsc
(*P= Probability Factor)
Financial Structure: Components
Key Assumptions:
• Construction loan
o up to 90% Loan to Cost
o 8 - 12% interest rate
o 1 - 2 points origination fee
• Permanent loan
o up to 80% LTV
o 6 - 10% interest rate
o 1 - 2 points origination fee
o Wind DSC: P99 = 1.00 dsc / P50 = 1.45 dsc
• Tax Equity Investor terms
o Tax credit pricing of 1.25 +/-
o 10% after tax hurdle
o 2.0% priority return
o Exit after recapture period
Organization Structure
Limited Partner (Tax Equity Investor)
General Partner
Your Wind Project
- Owns and operates facility Developer
99%
12 Month Construction Loan Mini Perm Loan
1%
100%
Tax paying entities
Partnerships for federal income tax purposes
Denotes an ownership interest
Cash flows from non owners
SFS - Closed Wind Transaction
Coastal Energy Wind
• 4 - 1.5 MW GE turbines (6MW
wind system) in Grays Harbor,
Washington
• $5,162,500 construction loan
• PPA with Grays Harbor PUD
• Coastal Community Action Plan –
Developer
• US Bank – Syndicator
• State Grant – No Perm Debt
• New Market Tax Credits (NMTC)
SFS - Closed Wind Transaction
Safeway Wind
• 2 - 1 MW Mitsubishi wind turbines
(2 MW System) in Tracey,
California
• $5.08 million construction loan
• PPA with Safeway Grocery Chain
(Distributed Wind)
• Foundation Windpower –
Developer
• US Bank – Syndicator
• State Grant – No Perm Debt
SFS - Closed Wind Transaction
Lime Wind • 6 – 500 kW Nordtank 500 rebuilt
wind turbines (3 MW System) in Lime,
Oregon
• $5+ million construction loan
• Bureau of Land Management (BLM)
Land
• USDA REAP Grant
• 1603 US Treasury Grant (ITC)
• Oregon Department of Energy –
State Energy Loan Program
• Oregon BETC
• New Market Tax Credits
SFS - Closed Wind Transaction
Anheuser Busch Wind
• 1.65 GE single turbine 1.6 MW
wind system in Fairfield, CA
• $3.5 million construction loan
• PPA with Anheuser Busch
(Distributed Wind)
• Foundation Windpower –
Developer
• US Bank – Syndicator
• State Grant – No Perm Debt
• Combined with Solar Array
SFS - Closed Wind Transaction
Ipswich Wind
• Hyundai 2.0 MW turbine in
Ipswich, MA
• $4.26 million construction loan
• $2.87 million permanent loan
• PPA with Ipswich Municipal
Light Department
• Aquinergy LLC – Developer
• 1603 US Treasury Grant (ITC)
• Massachusetts Wind Renewable
Energy Certificate (REC)
Questions
Chris Diaz
Principal
Seminole Financial Services
Email -
Cell - (727) 460-0578
Distributed Wind Expo Presentation June 2013
“Consumers are realizing they don’t need the power industry at all” David Crane, CEO NRG Energy
Our Vision Lease A Wind Turbine To Every Suitable Property
- 2 -
(3,500,000+ US properties can benefit from DG wind)
June 2013
Who We Are
- 3 - June 2013
Team With Deep Domain Expertise
RUSSELL TENCER Founder & CEO
TAL MAMO Founder & President
CULLEN KASUNIC VP, TECHNOLOGY
JOSEPH HESS VP, BUSINESS DEV.
- 4 -
• Founder, CEO, Wind Analytics • Over 1,000 wind projects modeled • Former equity fund manager, ETG Trade
• Founder, President, Talco • Built leading US wind turbine distributor • Board Member: DWEA, SWCC
• VP, Product Manager, Wind Analytics • Led software development • Led financial model development
Over 20 Years of Distributed Wind Energy Experience
• Senior Sales Manager, Solar City • Sold $30 million in Leases/PPA’s • Managed channel sales through Tesla
BRENT KROHN VP, PROJECT DEV.
• VP, Project Manager, Talco • Managed >150 wind energy projects • Managed Talco dealer network
JUNE 2013
For Turbines 100kW and Under
- 5 -
Build Project Provide System O&M
Property Owner
(Lessee)
Dealer Installer
United Wind
(Lessor)
The United Solution
JUNE 2013
We operate under the ITC, which is in effect until 2016
Total Savings: $30,952*
No Upfront Cost, Immediate Savings
WindLease™ Lowers Electricity Costs
Old Electric Bill
New Electric Bill
WindLease Payment
$750/month
$525/month
Typical Farm WindLease *Savings over 10 year WindLease term
Mo
nth
ly E
lect
ric
Bill
$200
$400
$600
$800
$0
- 6 - JUNE 2013
Why is WindLease Important?
$0
$25
$50
$75
$100
$125
$150
2005 2006 2007 2008 2009 2010 2011
Wind Turbine Sales
Mar
ket
Size
(in
mill
ion
s)
- 7 -
Turbine Sales Have Hit Their Peak¹
?
¹2011 U.S. Small Wind Turbine Market Report, http://www.awea.org/learnabout/smallwind/upload/AWEA_SmallWindReport-YE-2011.pdf
Sale
s P
eak
JUNE 2013
Solar Followed This Exact Trend
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2005 2006 2007 2008 2009 2010 2011 2012 2013(P)
Solar Leasing
Solar Purchases
US
Res
iden
tial
So
lar
Mar
ket
(in
Mill
ion
s)
And Would Have Gone Dark if Leasing Hadn’t Re-Energized The Market¹
- 8 -
¹Forbes: How CA is Democratizing Solar for the 99%, http://www.forbes.com/sites/toddwoody/2012/07/03/how-california-is-democratizing-solar-for-the-99/
Sale
s P
eak
JUNE 2013
Market is Here
- 9 -
Our Leasing Options Are RE-Energizing Distributed Wind
A $50 Billion Opportunity Is There, Just Waiting For Us¹
$1 billion
¹Internally generated market potential based on land resources, wind resources, policies, and proportional interest in renewables based on a discount on solar adoption
JUNE 2013
Lets Power Tomorrow
- 10 -
You submit your online customer application form.
We send you a custom WindQuote TM.
You tell us the customer loved the WindQuote.
We send you the full detailed WindLease TM for customer signing.
JUNE 2013