MONEY FOR NEW ENERGY, THE OUTLOOK

Project Finance Lawyer Offers Financing Outlook
22 February 2012 (North American Windpower)

"…[I]n the wake of some dramatic pullback by European lenders, along with continued debate in Congress whether to extend tax credits for wind farms and other alternative fuel sources…the Obama administration, hoping to reinvigorate the sector, is planning a major meeting on March 13 to deliver a pitch to the country’s largest companies about the benefits of tax-equity deals for renewable projects.

"Allan Marks, partner at Milbank, Tweed Hadley & McCloy, says now might be a good time for a renewables reality check…[but] there are some near-term bright spots…[M]ore strategic investors and other sources of funding will commit to renewable projects in coming months…Although European banks continue to step back, Marks believes that American, Canadian, and Japanese banks and funds will be stepping up financing for renewable deals…[as will] insurance companies, pension funds and other institutional investors…[and] capital markets activity in general, including private placements and other securities offerings such as project bonds…"

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"Marks agrees that tax-equity partnerships being pushed by the White House and U.S. Department of Energy could be a key factor in attracting new capital, thereby boosting the value of existing renewable tax credits, which otherwise could be squandered…He also expects more financing to come from industry vendors, especially equipment manufacturers with ample balance sheets looking to enhance their competitive share of a given market - say, solar panels. That lowers the cost of the project…

"…[T]he global market for renewable energy investment remains extremely strong…[with] still-expanding demand for power in China, Latin America, India and…Japan, which had previously put so much faith in nuclear, is now taking a more serious look at renewable energy sources in the wake of last year’s Fukushima disaster…In the U.S., renewable energy demand will actually be a boon to the gas industry…[U]tilities will turn to clean gas [to back up] renewable sources…"