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North American Power & Renewables: Wind equity players bulk up

17 December 2010

Mid-size US wind sponsors suffered particularly hard from the dislocation in debt markets from late 2008, and deep-pocketed equity investors hover over the US market. Do larger developers and investors have a better chance of competing for scarce utility power purchase agreements? Catherine McGuirk reports.

Read more: [wind] [enbridge] [RES] [utilities] [rfp]

[Editor's note: Shortly after this focus went to press, the US senate passed tax legislation that included an extension to the cash grant for renewables projects. For more details of the programme, see below]

Wind power generation in the US has been the domain of small and mid-scale developers for much of the past decade. It has evolved into a neatly-executed model of construction-to-tax-equity financing. The partnership flip structure, the centre of this model, is based on two tiers of equity, and allows sponsors to maximise their tax benefits and reap the rewards for assuming development and construction risk. However, the credit crunch and policymakers’ responses to it have created opportunities for new ownership struc­tures, and may hasten consolidation, or at least some equity recycling, in US wind. Waqar Zaidi, who leads renewable energy for Enbridge, notes that, “The market was built through entrepreneurship supported by tax incentives from the 1990s...

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