States, towns and communities seeking to reduce exposure to gyrating power prices, to reduce their carbon emissions, and foster economic development increasingly are promoting renewable power capacity. They are looking for ways to assist private sector development of clean power projects. In some cases, the lack of adequate equity or debt financing is seen as slowing projects. They are looking for ways in which government incentives and support can offset or remove such constraints.

An increasing number of towns, public utility districts, schools, and other public entities are considering investing directly in renewable power generating projects. Raising financing for such projects often is complicated by budget constraints, the inability to use Federal incentives geared for privately owned projects, and the need to blend multiple types and sources of financing. Sources and levels of financing for public sector financial support are growing, including Clean Renewable Energy Bonds (CREBs), Rural Utilities Services loans and grants, USDA Section 9006 grants and loans and other Federal programs, as well as state and state-level clean energy fund support programs. In addition, private sector financing and ownership structures originally developed to assist developers with limited financial strength are being adapted as public-private hybrid ownership structures to enable public sector entities to mobilize private sector capital in support of public sector projects. Such facilities and structures can be difficult to identify and access successfully.

Clean power project financings often feature a blend of public incentives and private financing sources. The incentives are varied in their terms and limitations. An important limitation is structuring the risks and terms of equity investments in clean power projects to enable use of the Federal production tax credit and avoid later reallocation disputes with tax authorities. Birch Tree Capital is familiar with crafting financing plans that successfully meld public sector incentives and private financing to achieve required equity returns. Birch Tree Capital has a particular expertise in structuring financing plans and terms to enable projects to utilize available Federal and state tax and other investment incentives for clean power projects. Birch Tree Capital’s principal and affiliated consultants have closed multiple financings for wind power transactions that have combined financing from tax-oriented institutional investors, the project developers, and syndicated commercial bank debt.

Birch Tree Capital can assist public sector entities interested in promoting or undertaking clean power projects in several respects:

• Advise on current financing market conditions.
• Craft appropriate financing plans for public sector investment projects.
• Identify suitable financing sources for public sector investment projects.
• Apply for selected public sector financing support programs.
• Arrange private sector equity capital willing to enter into public-private hybrid structures.
• Coordinate third party lender/investor due diligence.
• Negotiate financing term sheets and full financing documentation.