Financial regulations add burden to wind power projects

Michael Giberson

Lawrence Berkeley National Lab’s recently published 2011 Wind Technologies Market Report (pdf) provides a fairly focused look at wind power industry developments. Among the insights:

At the same time [as the European debt crisis began creating trouble for some lenders], new banking regulations took hold, driving considerably shorter bank loan tenors (institutional lenders, meanwhile, continued to offer significantly longer products). In contrast to the weakened debt market, the market for tax equity improved somewhat in 2011 … As the number of grandfathered Section 1603 grant deals begins to taper off in 2012, however, attrition in tax equity investors is possible, as some have indicated no interest in PTC deals.

I’m sure banking regulators didn’t intend to lead banks to offer shorter loan terms to wind power developers, but the rain falls on the just and the unjust and similarly the consequences of bank regulations are no respecter of conflicting government policies. (I’m wondering how banking regulators would score the net costs and benefits of slightly discouraging subsidized energy projects?)

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