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Windy Flats: Pre-pay power

16 December 2009

Read more: [cannon] [windy] [scppa] [hsh]

Cannon Power received a first tranche of stimulus grants for its Windy Point/Windy Flats phase II project in November. The $17.4 million grant, the first of a total of $170 for which Cannon has applied, follows Cannon's close in October of an amended and restated construction financing that allowed the developer to expand the project by roughly 30%.

The financing is notable as the reappearance of the prepayment financing structure in US wind. The prepay was once marketed as a way for public power entities to gain control of wind generation and still benefit from the tax benefits available to wind producers. It was, at least initially, an offshoot of the tax equity market.

But the structure offers equally compelling advantages to private developers because a wind power prepayment is essentially a loan that reflects the low, usually tax-exempt, costs at which public power authorities can borrow. The...

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