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United States

Finance - Slump sparks public loan rush

US: America's Export-Import bank has seen both the volume and monetary amount of requests for loans skyrocket since the wind industry downturn at the end of 2008.

The Ex-Im Bank, as it is known, is a US government bank set up to promote exports of US manufactured goods by providing long-term financing. In many cases, it acts as a backup lender to manufacturers that have not found the right lending terms from commercial banks.

Around 18 months ago, at the time of the collapse of the US stock market and wider global economic downturn, applications for loans to build manufacturing in the US or export goods from the US were averaging between $10 and $50 million and applications for $100 million were rare.

The bank is beginning to see amounts well in excess of $100 million every week. "The dollar amounts seem to be growing exponentially," says Rob Guthrie, a renewables specialist for the Ex-Im Bank. "It went from tens of millions to hundreds of millions in the last 18 months."

He attributes the loan application boom to the depressed economy and the tightening of credit available through commercial lenders. US-based companies that need financial backing to sell products abroad are first encouraged to seek funds from private lenders. The Ex-Im Bank provides applicants with an exhaustive list of lenders before considering an application. "The lenders just haven't responded as readily as they did a year and a half ago," says Guthrie. "Which leaves us with no choice but to provide financing ourselves."

The Ex-Im Bank is one of the few banks that will lend cash at 18-year payback periods. Most commercial banks do not like lending for more than 10 or 12 years. Ex-Im currently provides eligible applicants 18-year loans fixed at 4.9%. "Bank industry rates can be a little lower than what we offer in our direct loan programme but not many want to give more than 10 or 12 years to pay," says Guthrie. "We've had terrible luck lately in interesting private lenders in getting involved in these longer-term loans. We like to use private lenders, but if the buyer can't identify a bank, we're the lender of last resort."

Among the Ex-Im Bank's most recent big wind transactions was a $81 million direct loan to Electrica del Valle de Mexico (EVM), a subsidiary of France's EDF Energies Nouvelle. EVM is the local project company for a 68MW wind plant in Oaxaca, Mexico. The loan supported the purchase and export of 27 US-made 2.5MW Clipper turbines used at the project, currently under construction. The wind plant's output is bought by US retail giant Walmart to offset its energy costs at its facilities in Mexico.

Guthrie says there are many wind deals on the horizon, but none are finalised to the point they can be disclosed. He adds that wind-energy-related applications are overtaking solar applications partly because of increased acceptance of wind as the more cost-competitive technology.

He says recent solar photovoltaic applications have hovered around a cost of $4 million per installed megawatt compared to $1.2-$1.3 million for wind. "Wind energy is becoming recognised as more affordable," says Guthrie. "Maybe it doesn't work everywhere, but where it works, it works very well."

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