New U.S. Finance Tool For Renewable Energy Launched

October 29, 2009 at 12:32 PM Leave a comment

The U.S. Treasury on Tuesday authorized more than 800 governmental agencies and power companies to issue $2.2 billion of Clean Renewable Energy Bonds, a financing tool included in the economic stimulus plan for developing alternative energy generation.

“Because of the Clean Renewable Energy Bonds awards announced today, energy developers will be able to access lower-cost credit to help make the shift to clean renewable energy production, benefiting both our economy and our environment,” said Treasury Deputy Secretary Neal Wolin in a statement.

The program only touches a handful of states. Public power companies, for example, received $800 million of bonding authority, but those companies are only in California, Colorado, Illinois, Massachusetts and Washington. Those in Washington were authorized to issue the most debt — for hydropower and wind projects — with an allocation nearing $500 million.

The law capped the allocations for public power companies at $800 million, despite the 38 applications totaling $1.44 billion that the federal government received.

Cooperative electric companies in just 17 states received bond allocations, while governmental bodies in 17 states were authorized to sell the debt.

The bonds offer a credit against federal tax charges in place of an interest payment. The credit can be stripped and sold separately from the bond principal and the debt proceeds must be spent within three years.

The bonds were created in other legislation, but the American Recovery and Reinvestment Act increased the volume cap and called for those interested in developing energy technology that does not rely on fossil fuels to apply for allocations by August.

For example, three electric associations in Alaska, an oil producing state, received $124.6 million of bonding authority for developing wind electricity generation. The sunny city of Tucson, Arizona, received a little more than $14 million for creating solar energy production.

Even though the legislation included technologies outside of solar, wind and water, only $200 million in authority went to biomass (most of it for a project in Georgia) and less than $5 million was dedicated to geothermal generation.

In a report released late Monday, the Congressional Budget Office said it will monitor the success of the various tax credit bonds in the stimulus plan to see if they can provide alternatives to those offering tax exemptions.

So far, Build America Bonds, which offer tax credits or interest payments subsidized by the federal government, have taken the municipal bond market by storm. All of the BABs sold, though, have only included the subsidized payments. Qualified School Construction Bonds, which do not offer subsidies, have had less of an impact on the market, according to Fitch Ratings.

http://www.planetark.com/enviro-news/item/55218

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Entry filed under: Conservation, Energy, Green Tech, National News. Tags: .

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