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Wind Economics, Finance & Policy David Lipschitz at Retech 2009 by Mind Map: Wind Economics,
Finance & Policy
David Lipschitz
at Retech 2009
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Wind Economics, Finance & Policy David Lipschitz at Retech 2009

Speakers

Matt Ferguson

Reznick Group

An accounting / consultancy

Energy Production Model

Management Consultant

Clients want more detailed due diligence

Rich Krauze

3Tier Company

Forecasting, much more analysis is being done before PPA's are signed, spacial ability, net energy output, what is the ROI; how long will it take

Fuel (for projects), Wind, Solar, Hydro

Ed Feo

Milbank, Tweed, Hadley & McCloy law firm

do you see any new entrants to the debt market?, mostly German banks involved in this, German banks getting funding from govts means that they are being forced to invest in their own markets and in their own companies

John Eberg

Managing Director, JP Morgan

"P50" production

Consider the credibility of the industry

tax equity is going to shift to debt financing!

Finance

Fed govt pays 2/3rd of capital cost of wind projects

Cos need some capital of their own

getting expertise for capital

cost of capital is up

cost of equipment and construction is down

although cost of some turbines is up and others is down

debt?

different kinds of financing

construction financing

300 basis points or better

150 basis points 15 months ago

cost of tax equity has gone up

is there a VC market

what about the residual value buyout, JPM keeps a 5% interest

under a lease, one has to buy back the entire asset

JPM: 100MW wind farm is $200 million

risk has changed

are there loan guarantees?

is underwriting available?

[it seems like the red tape is much more and that financiers don't want to take any risk! ie the split between business risk and financial risk has changed]

Policy

effect of the stimulus bill

grants

risks

of deals ito the grant compared with former deals

pricing effects, tax equity effect, PTCs, Depreciation

number of people who can participate should increase

PPA's, ITC's

How do munipalities get financing?

consider the legal environment

Economics

consider the fuel, ie wind, sun, water, etc, for these projects

need to have a great project

need experience, eg in project management and implemented projects

are there strategic relationships and partnerships you can take advantage off

there is a flight to quality

high scoring

location

resource

equipment

eg GE and Vestas machines get finances

the more bullet proof the project is, the more seriously you will be taken by financing bodies

how can you get to fair market value?, do you need a PPA?, should it be long term?, should it be fixed?

it must be a bullet proof project

or you must have a strong balance sheet that can absorb the risks

there are much more questions than their used to be and people aren't making assumptions any more

consider the underlying project economics

a good wind isn't enough, consider the wind availability, consider the long term wind speed average, consider the standard deviation, eg this year might have great wind, but what about the average

you need to consider the project economics, need 17% IRR

buy the equipment at the right price

what is the real, final, ultimate return?