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Equity investments in community wind projects

Equity investments in community wind projects. Presented by Clifford M. Kenwood. SANTA FE, NM. 7/26/2007. Rebirth Capital Overview. Rebirth Capital is specialty finance firm focusing on: Helping finance smaller renewable energy projects nationwide.

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Equity investments in community wind projects

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  1. Equity investments in community wind projects Presented by Clifford M. Kenwood SANTA FE, NM 7/26/2007

  2. Rebirth Capital Overview Rebirth Capital is specialty finance firm focusing on: • Helping finance smaller renewable energy projects nationwide. • Helping the Gulf Coast recover from Hurricane Katrina. Two New Markets Tax Credit funds: • The Gulf South Rebirth Fund – business loans and investments in GO Zone • American Community Renewable Energy Fund – renewable energy, biofuels and green technologies. Rebirth Capital Renewable Energy Fund • Focuses on tax credit equity investments in smaller commercial-scale renewable energy projects nationwide.

  3. Rebirth Capital Renewable Energy Fund • Partnership between Rebirth Capital and TransCapital • Fund focuses on tax credit equity investments in renewables, including: • Wind • Solar • Small Hydro • Other technologies eligible for Federal PTCs • Investment size of $2 – 25 million • Streamlined documents and closing process help manage transaction costs • Community economic development background offers different investment perspective

  4. Capitalizing Community-Based Projects • Why is it so hard for community projects to attract tax equity? • Institutional investors don’t have the time to do small, one-off projects. • Transaction costs can be very high • Developers generally less experienced and financially sophisticated • Difficult to manage a portfolio of small projects • Why do we think equity investments in community projects are worthwhile? • High community impacts – can be important to some investors. • Can develop diversified portfolio to minimize geographic, technology and developer risks. • Life is too short to take the easy route!

  5. Preparing a Project for Tax Equity Investment • Tax equity is generally the last money into a wind deal • Tax equity investors look for projects that: • Have turbines (the hardest part these days?) • Rebirth is currently investigating “frame agreements” with turbine manufacturers for community projects. • Are fully permitted • Have a PPA (merchant projects are possible, but not easy) • Have lined up non-recourse project financing and construction financing • Representation by an attorney with experience closing smaller deals is very important

  6. Deal Structure: Basic Flip Structure Stage 1: Construction Loan Construction Lender Project Developer (Man. Member)

  7. Deal Structure: Basic Flip Structure Stage 2: Commercial Operation Date Debt Repayment Construction Lender Project Developer (Man. Member) Rebirth (Tax Equity Investor) Equity Capital

  8. Deal Structure: Basic Flip Structure Stage 3: Pre-Flip Operations 95% distributed cash and tax benefits until target IRR achieved 5% distributed cash and tax benefits Project Developer (Man. Member) Rebirth (Tax Equity Investor)

  9. Deal Structure: Basic Flip Structure Stage 4: Post-Flip Operations 95% distributed cash and tax benefits 5% distributed cash and tax benefits Project Developer (Man. Member) Rebirth (Tax Equity Investor) Other structures are possible, but with smaller projects it is best to keep it simple.

  10. Cliff Kenwood(504) 891-3118cliff@rebirthcapital.com

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