United States

United States

First early stage wind farm financing based on RECs

One of America's leading renewable energy credit (REC) brokers, Renewable Choice, sealed a deal last month it says represents the first time a corporation has made an up-front commitment to buy all of the renewable energy credits (RECs) from a US wind farm still in the financing stage. The significance of the deal is in improving the chances for smaller scale projects to reach construction, says Dave Drescher of John Deere Renewables, which together with a local landowner co-developed the 10 MW wind farm in the Texas Panhandle that is providing the RECs for the deal. "We're pleased to help pioneer this new model, which provides more financial stability and greater incentives for project development by getting long term REC purchase commitments in place during the financing stage," says Drescher. "We're confident that transactions like this will help develop smaller scale wind projects, supporting rural communities and getting more clean wind energy onto the grid faster." Purchaser of the RECs is office furniture manufacturer Steelcase Inc. The eight-turbine project will begin operation on or about May 1 and is expected to generate 35,000 MWh a year, enough to cover about 20% of Steelcase's entire electricity demand throughout the US. REC sales are typically clinched in one-off deals after a project has been developed and commissioned, but this reflects a new development, says Renewable Choice, based in Boulder, Colorado. Under its "New Growth Wind" model, companies can make a long term pledge in the financing stage of projects, thereby increasing the positive environmental impact of their action. These commitments reduce risks for project developers, shorten development cycles for new wind farms, and help bring more clean power online faster. In this case, Steelcase and Renewable Choice made a long term commitment during the wind farm's financing stage to the project developer.

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