For developers of clean and renewable power projects, the financial feasibility of proposed projects is central to their achieving successful profitability. Developers often seek third party financing sources to leverage internal financial capabilities, reduce direct project exposure, and to move projects into construction and operation. Some developers elect to sell their projects, while others want to retain partial or full ownership.

The Federal and state governments have created a rich mosaic of project-oriented financial incentives. The incentive programs are designed to assist and encourage private sector development of clean renewable power projects. Between 1998 and 2012, Lawrence Berkeley Laboratories estimates that fifteen state clean energy funds are expected to collect $3.5 billion in funding for grants, loans, and other financial support for clean energy projects. Details are available via web links in our Resources page. Such programs create opportunities for developers to manage their own capital exposure to their projects.

Clean power projects need investment from entities able to make efficient use of the various tax-related incentives. Project developers and investment banks have developed multiple financing structures to enable tax-oriented institutional investors to invest in clean power projects. The variations in such structures reflect differing objectives and financial strength among project developers and investors, as well as the needs of specific projects. Developers need to understand how various structures appeal to different potential investors and to be able to execute a financing plan and negotiate investment documentation that meshes those competing interests.

Developers are seeking third party investment capital at all stages in the development of projects. In some sectors, this is being driven by cost increases and scarcity of key equipment, e.g., wind turbines and photovoltaic panels. Investors need to understand the underlying project risks and potential rewards of investing at each stage in the development of projects and to be able to negotiate changes in the terms of an investment opportunity to mitigate identified risks consistent with the proposed equity returns.

Birch Tree Capital can assist developers of clean power projects in several respects:

• Assist in identifying viable power off-take, ownership, and financing structures that both meet the goals of the developer and are likely to attract third party institutional equity and debt financing.
• Construct and review developer financial models for sufficiency in assessing wind project prospects.
• Identify co-developers.
• Identify strategic and institutional equity investors.
• Assist in negotiating equity letters of intent and definitive purchase and sale documentation.
• Facilitate due diligence review process with prospective investors.
• Identify and assist in retaining other advisors as needed to structure a transaction, e.g., legal, independent engineer, insurance, land, tax valuation.
• Coordinate due diligence review process with the project sponsor and investor’s other advisors.
• Coordinate with developer’s legal counsel on tax matters relating to a project’s Federal and state tax impacts.
• Assist in crafting power and renewable energy credit purchase agreement documentation consistent with the goals of the developer and needs of third party institutional equity and debt financing sources.
• Assist in identifying and securing construction debt financing sources, if and as needed to balance institutional equity and/or long-term debt financing. v Assist in identifying prospective commercial term debt financing sources, if and as appropriate.