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Alternative Energy
CCMI has provided financial consulting services for alternative energy
projects since 2001. Our experience has been in wind, biomass to electricity,
biogas to electricity, biochemical production, solar, and alternative
fuels. Understanding the complexities of the alternative energy market,
CCMI undertakes due diligence to optimize the financial structure of
alternative energy projects, utilizing appropriate government programs
and incentives, such as the DOE and USDA Loan Guarantee Programs and
New Markets Tax Credits, to enhance project structure. Our objective
is to produce the most efficient project financing for our client.
Due Diligence for Alternative Energy Projects
CCMI’s due diligence process consists of reviewing all legal documentation,
including loan documents, construction contracts, power purchase/lease/off-take
agreements and warranties, supply contracts, partnership agreements,
offering statements, and letters of credit. CCMI also analyzes land acquisition,
permitting, regulatory requirements, environmental assessments, feasibility
studies and power resource evaluations.
Upon evaluating government programs
and incentives, CCMI participates in the application process for relevant
programs, including New Markets Tax Credits and DOE and USDA Loan Guarantee
Programs. For New Markets Tax Credits, CCMI also qualifies projects,
locates Community Development Entities (CDEs) with available allocations,
and identifies investors. Credit analysis includes verifying the credit
quality of suppliers, counterparties to off-take agreements, and consultants,
as well as providing guidance throughout the application process for
Borrower credit ratings. Additionally, CCMI evaluates pro forma financials
and performs structural sensitivity analysis for alternative energy
projects.
Government Programs and Incentives
- Department
of Energy (DOE) Section 1703/1705 Loan Guarantee Programs
Section 1703
of Title XVII of the Energy Policy Act of 2005 (EPAct 2005) established
a DOE Loan Guarantee Program for projects that “avoid, reduce, or sequester
air pollutants or anthropogenic emission of greenhouse gases” and “employ
new or significantly improved technologies as compared to technologies
in service in the United States.” The American Recovery and Reinvestment
Act of 2009 established a program under Section 1705 of Title XVII of
EPAct 2005 that authorizes loan guarantees to certain renewable energy
systems, electric transmission systems, and leading biofuels projects.
Unlike the Section 1703 program, projects need not employ innovative
technologies to qualify for loan guarantees under the Section 1705 program.
CCMI’s affiliate, FLCO, has developed an alternative
energy financing program for DOE’s State and Local Government and FIPP
Loan Guarantee Programs under Section 1705 of the EPAct of 2005. The
Department of Energy approved FLCO’s taxable revenue bond financial
structure, which provides liquidity under the Loan Guarantee Programs
in today’s somewhat constrained market. FLCO’s taxable revenue bond
financial structure is applicable to the Section 1703 and U.S. Department
of Agriculture’s Loan Guarantee Programs as well.
- New Markets Tax Credit
(NMTC)
The Community Renewal Tax Relief Act of 2000 created
the NMTC program, which is administered by the Department of Treasury’s
Community Development Financial Institutions Fund (CDFI Fund), to encourage
investment in low-income communities. NMTC is a 39% tax credit claimed
over six years and one day. In order to qualify, investments must be
made in specially created entities that are certified by the CDFI Fund
as Community Development Entities (CDEs), which serve or provide capital
and maintain accountability to low-income communities. NMTC is among
the programs CCMI utilizes to optimize financial structure and mitigate
risk for alternative energy projects. CCMI is able to qualify projects,
locate CDEs with available allocations, and identify investors for the
NMTC program.
- United States Department of Agriculture (USDA) Loan Guarantee
Programs
USDA’s Rural Energy for America Program (REAP) and Business
and Industry (B&I) Guaranteed Loan Programs are available in rural
areas, which include “all areas other than cities or towns of more than
50,000 people and the contiguous and adjacent urbanized area of such
cities or towns.” The B&I Guaranteed Loan Program is designed to
improve the economic and environmental climate in rural communities.
As such, eligible businesses/projects must provide employment or otherwise
improve the economic or environmental climate by promoting the conservation,
development, and use of water for aquaculture or by encouraging the
development of renewable energy systems.
The REAP Guaranteed Loan Program
is available for the purchase and installation of renewable energy systems
(bioenergy, geothermal, hydrogen, solar, wind, and hydro power) and
energy efficiency improvements. Borrowers must be an agricultural producer
or rural small business. CCMI utilizes the USDA Loan Guarantee Programs
to enhance the credit quality of applicable renewable energy projects.
The taxable revenue bond structure for alternative energy financing
developed by CCMI’s affiliate, FLCO, is applicable to the USDA Loan
Guarantee Programs.
Energy Efficiency and Power Generation Projects
CCMI’s experience in energy financing dates back to 1990, when the firm
began providing capital lease financing for various energy efficiency
and power generation projects. These have included projects for the
following entities:
Southern Arkansas University; Tulsa Airport Authority;
Philadelphia Municipal Authority; State of Mississippi Department of
Mental Health; School Districts of the State of Mississippi; Community
College Districts of the State of Mississippi; Jefferson Parish, Louisiana;
Board of Education of the Township of Livingston, New Jersey; State
of Kansas’ Facility Conservation Improvement Projects (at Pittsburg
State University); Board of Public Utilities of the City of Springfield,
Missouri; and Louisiana State University and Agricultural and Mechanical
College.
Furthermore, in 2003, CCMI not only provided the financing,
but also provided for the construction of a
22MW electrical generation power project at the U.S. Department of Energy’s Los Alamos National
Laboratory through its Assignee, CCMI Power, LLC.
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