OREGON WIND WORKING GROUP

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OREGON WIND WORKING GROUP
Klamath Falls
Jeff Keto, Loan Manager Energy Loan Division
April 8, 2005
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Renewable Resources

• Oregon Department of Energy Project Support
• Business Energy Tax Credit
• Energy Loan Program
• Project technical and design review
• Project financial review

Stateline Wind Project
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Business Energy Tax Credit

• Encourages investments in
• Energy efficiency measures
• Renewable energy production
• Alternative fuels
• Reducing commuting
• Sustainable building design

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Business Energy Tax Credit

• Incentive program (not a reward)
• Owner must apply before project start
• 35 of eligible project costs
• Project owners pay review fee (0.75 of
  eligible costs)
• Tax credit taken over 5 years (10, 10,
  5, 5, and 5)
• If eligible costs are 20,000 or less,
  credit taken in one year

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Business Energy Tax Credit

• Project must be 10 more efficient than energy
  code or standard industry practice
• Lighting retrofits must be 25 more efficient
• Project must have a simple payback of 1 to 15
  years (30 years for solar PV systems)

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Who can apply for a Tax Credit?
Business owner Rental property
owner Non-profit organization School Public
entity Tribe
West Salem High School
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What is the Pass-through Option?
The pass-through option allows a project owner
to transfer their tax credit eligibility to a
business or individual with a tax liability in
exchange for a lump-sum payment.
New Eagle Rock ElementaryEagle Point,
ORApplying for LEED certification
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Business Energy Tax Credit

• From 1980 through 2003
• Tax credits issued 7,461 (Set record in
  2004 1,097 tax credits issued)
• Total project costs 618.6 million
• Energy saved 19,146 billion Btu per year
• Energy generated 3,531 billion Btu per year

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Energy Loan Program

• Eligible applicants public entities, tribes,
  businesses, individuals, non-profits
• Loans for efficiency, renewables, recycled
  products and alternative fuels
• No cost to taxpayers fees and interest spread
  pay program costs
• Loans Activity 606 loans for 315 million
• Energy Savings/production 44 million per year

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Energy Loan Program Terms

• 20,000 to 20 million
• 5 to 20 year terms
• Construction or take-out loans
• Application fee 1 loan fee
• Low fixed rates (March 2005)
• Private 6.00, 13 year
• Private 5.50, 5 years
• Public 4.90, 12 year
• Collateral required

Viridian Place Portland
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Energy Loan Program Terms cont.

• Flexibility on terms and structure. Can use
  other
• collateral and work with the existing debt or
  other
• lenders
• Can include most costs in the loan, e.g. study,
  design, engineering, installation,
  commissioning
• Use with tax credits, utility and other
  incentives
• Possible use of tax-exempt funding for
  renewable resource projects (may conflict
  with federal tax
• credits)

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Technical Assistance

• Review project design engineering
• Technical support in selecting energy
  measures
• Assist in troubleshooting existing
• projects
• Assistance in developing demonstration projects
• Fuel blind and impartial to equipment brand or
  specific contractor

Ashland City Hall
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Energy Loan Program Process

• Application on web site or via e-mail
• Staff reviews project technical and financial
  information
• Approval usually within 2 weeks if less than
  100k
• Advisory Committee reviews loans more than
  100k (500k state agencies)

Tamarack Wellness Center Eugene
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Project Financing Issues

• Feasibility study - Business plan
• Funds for feasibility study and initial
  development
• Grants USDA 2006, ETO other
• Developer funds
• Local owners funds
• Equipment design cost, availability,
  performance
• history and warranties
• Insurance, maintenance and other operating costs
• Reserves for debt service, repair replacement
• Incentives BETC, ETO, PTC and their interaction

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Project Financing Issues cont.

• Financing balance sheet vs. project financing
• Ownership structure
• Tax efficiency
• Complexity
• Equity
• Local owners, can include developer
• BETC pass-through
• Wealthy individuals
• Corporate tax-equity investor
• Development cost timeline vs. availability of
  funds

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How to Complete a Local Project

• Build a team to share the work
• Obtain initial funding for feasibility and
  development
• Develop a business and financial plan
• Anticipate a lot of work
• Obtain community support and local sponsors
• Understand risks and commitment
• Mitigate or share risks
• Have a celebration when complete

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Local Benefits

• Land lease payments
• Property taxes or in lieu payments
• Management fee
• Construction work
• Cash flow to owners (primarily after project
  debt is paid

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Other Energy Priorities

• Practice conservation first
• Solar Remote Livestock Watering

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Resources

• Oregon Department of Energy
• 625 Marion St. NE, Salem, OR 97301-3737
• 1-800-221-8035
• Jeff Keto 503-373-7981
• jeff.s.keto_at_state.or.us
• www.energy.state.or.us
• www.awea.org
• www.windustry.org