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Viewing Renewable Energy as an Opportunity

U.S. Bancorp Community Development Corporation (USBCDC) is dedicated to the development of renewable energy sources building on its experience in other tax credit investments to become an expert in solar (photovoltaic) financing. USBCDC has committed more than US$100 million in solar financing.

Darren Van’t Hof, Director of Renewable Energy Investments of U.S. Bancorp Community Development Corporation insisted that their expertise in combining various tax credits, along with their pioneering efforts in structured finance enables USBCDC to offer flexible products in the most challenging environments.

Reported by Stella Y. Lee (pved1@infothe.com)

  

Could you talk about yourself and solar financing programs U.S. Bancorp has introduced for the renewable energy industry?

Since 2008, U.S. Bancorp has committed more than US$690 million of renewable energy tax equity in support of clean energy projects (US$314 MM of tax equity in 2011 alone) with over US$570 million invested in solar power generating facilities and the balance in wind energy projects. This commitment has supported the development of more than US$1.5 billion worth of projects, including residential solar funds, commercial and municipal wind and solar projects and utility-scale wind developments. These projects provide clean, affordable energy to power purchasers.

 

How did U.S. Bancorp first become interested in solar energy investments?

Over the years, U.S. Bancorp, through the US Bancorp Community Development Corporation, developed a tax equity expertise in the areas of Affordable Housing, Historic Tax Credits, and New Market and Historic Tax Credits. In 2008, U.S. Bancorp reviewed the renewable energy sector as an opportunity and subsequently applied its tax equity investment disciplines to Renewable Energy investments. The Renewable Energy team has successfully developed a tax equity investment product that respects the overall credit discipline of U.S. Bank while preserving the sponsor’s ability to enjoy upside and raise competitive project debt.

 

What’s the biggest current barrier to financing solar projects from a bank’s view?

In many cases, projects that have had difficulty obtaining financing have negotiated PPA (Power Purchase Agreements) that are priced too low due to an under-allocating of operating and maintenance costs and a miscalculation for the cost of capital. These developers will often attempt to renegotiate the PPA with the off-taker in order to structure a transaction that can support the development costs, expenses and debt service.

From a lender’s perspective, simply having a signed PPA with a creditworthy off-taker is not enough to secure financing. Developers must align themselves with experienced partners and advisors who have the necessary expertise in the solar development market. 

 

Is PV the only renewable energy industry that you are focused on?

U.S. Bancorp prefers solar PV, of any scale, as opposed to other/newer solar technologies. U.S. Bancorp is an active Investment Tax Credit investor in wind projects in the U.S and has started looking at other renewable technologies. 

 

What makes you different from other banks assisting the solar projects?

U.S. Bancorp’s investment approach is to efficiently monetize the tax attributes associated with renewable energy projects while leaving the remainder of the economic benefits, and risk, to the developer or sponsor.

 

Stella Y. Lee is Editor of InterPV. Send your comments to pved1@infothe.com.

 
 

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