Marty Wilde

WINData LLC – Wind energy engineering since 1991

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Governor visits wind farm near Fairfield

Gov. Steve Bullock visited a wind farm near Fairfield on Thursday as part of a series of energy roundtables he’s conducting around the state.

Previously, Bullock conducted a solar energy roundtable in Bozeman at Simms Fishing Products and toured the building’s new solar panel array. He also toured a weatherization project at a home in Missoula and held a roundtable about energy efficiency efforts.

Bullock said he’ll use input from the roundtables to develop an energy plan he is expected to release late this month.

The state has an opportunity to expand the state’s energy portfolio, he said.

“We can help design what that energy future will look like,” Bullock said.

Bullock was scheduled to conduct another roundtable in Colstrip, home to a coal-fired power plant and a coal mine, on Tuesday.

The state’s future energy options will include coal but also wind, solar and hydro, Bullock said.

Recently, Pennsylvania-based Talen Energy, which owns a share of the Colstrip plant and operates the facility, said its role as operator is not economically viable and the plant’s five owners will need a new manager by May 2018.

“The wind is shifting under our feet when it comes to energy,” said Bullock, who conducted an energy roundtable on wind at the Montana Farmers Union in Great Falls following his visit to the wind farm near Fairfield.

The 13-turbine, 25-megawatt Greenfield project is located next to the six-turbine, 10-megawatt Fairfield Wind farm, which was completed in 2014.

Developer Martin Wilde of WINData LLC, said both wind farms are examples of smaller, community scale wind projects that involve local contractors and land owners.

“There’s great expertise in Montana for Montanans to build them,” he said.

Dick Anderson Construction of Great Falls is the general contractor. The power is being sold to NorthWestern Energy.

Allan Frankl of Dick Anderson Construction said 60 to 70 people will be working on the Greenfield project during the height of construction. Turbine components are expected to arrive later this month and be up by mid-September. The wind farm is expected to be producing power after Sept. 30.

Land owner Marvin Klinker said he’ll receive a percentage of revenue from the electricity produced at the wind farm.

Follow Karl Puckett on Twitter @GFTrib_KPuckett.

Wind energy engineering since 1991

Source: WINData LLC – Wind energy engineering since 1991

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Choteau Acantha Article – Industrial wind farm has broken ground in county-pub 3-30-16- WINData LLC

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Choteau Acantha Article – Industrial wind farm has broken ground in county–pub 3-30-16–

Choteau, Montana March, 30, 2016

By Nancy Thornton, Choteau Acantha reporter

A second industrial wind farm has broken ground southeast of Choteau, even as a wind farm half the size located on the new project’s western boundary was sold to a New York-based renewable energy investment company.

Teton County Commissioner Jim Hodgskiss said a Greenfield Wind LLC official, Matt Wilson, notified him that contractors would break ground during the week of March 20 for a 15-turbine wind farm next to the six-turbine Fairfield Wind project that was completed in May 2014.

The Teton County commissioners last summer approved a 10-year tax abatement for the proposed $47 million Greenfield Wind project while denying an abatement for the $19 million Fairfield Wind project.

Subsequently, Fairfield Wind appealed the state Department of Revenue’s determination that Fairfield Wind had a $19,118,781 market value. The matter is now before the Montana Board of Tax Appeals with all “discovery” documents due by April 25 and the hearing set for July 19.

Fairfield Wind’s 2015 tax bill was $323,569.83, an amount, with some later adjustments, that was paid under protest.

The Fairfield Wind farm is located in the Choteau elementary and high school districts and the proposed Greenfield Wind farm is in the Power High School and the Greenfield Elementary School districts.

Revenue officials estimated that Greenfield Wind would generate an estimated annual tax bill in the neighborhood of $863,000 under the cost approach, although with the tax abatement set for 50 percent during the first five years, local governments would receive only half of that.

Wilson works for Foundation Windpower LLC that owns a majority-member equity interest in Greenfield Wind LLC. The minority member of Greenfield Wind is Fairfield resident Martin Wilde who developed both wind farm projects under his company, WINData LLC.

Wilson and Wilde did not respond to invitations for telephone interviews.WINData has filed two lawsuits against Foundation Windpower in Teton County District Court that Judge Robert Olson recently dismissed. However, WINData has appealed the two cases to the Montana Supreme Court.

In December 2015 Foundation Windpower sold its interest in the Fairfield Wind project (the legal entity at that point was called Fairfield Wind Master Tenant LLC) to Greenbacker Wind LLC, which is a business created by Greenbacker Renewable Energy Corp. and Greenbacker Renewable Energy Co. LLC of New York, New York.

Greenbacker, in a December press release, said it acquired the Fairfield Wind project for $6,615,000 in cash and the assumption of $12,412,000 in debt for a total of $19,027,000 on Dec. 8, 2015. It is a “publicly registered, non-traded limited liability company that expects to acquire a diversified portfolio of income-producing renewable energy power plants, energy efficient projects and other sustainable investments,” according to its website.

The wind farm has two 1.6-megawatt and four 1.7-megawatt turbines. The generated electricity is sold to NorthWestern Energy under a long-term power purchase agreement that has 18.5 years remaining on the contract.

Greenbacker, citing the project as a “fund portfolio” for its investors, forecasts a 10.7 percent initial yield on the investment, but cautioned in its literature that that yield is not a measure of the fund’s performance and it is not necessarily indicative of distributions that the fund may provide to investors.

Wilde has had disputes with Foundation Windpower since mid-2015 and in court documents said he filed a notice of dissociation with the Fairfield Wind entity over Foundation Windpower’s refusal to supply him with accounting information, among other things. He refused to sign off on Foundation Windpower’s proposed monetary value of WINData’s 10- percent equity interest in Fairfield Wind and he declined to agree to the sale.

However, Foundation Windpower’s attorney Stephen Brown of Missoula successfully argued in Olson’s court in February that the operating agreement the pair of companies signed required that the dispute be brought in a California forum, not one in Montana.

Brown successfully argued a similar point when in July 2014, the Montana Supreme Court found in favor of San Diego Gas & Electric Co., (against Naturener USA that owns wind farms in Glacier and Toole counties) determining that the “consent to conduct all” provision of the first contract between the two parties required the parties to litigate all disputes Industrial wind farm has broken ground in county–pub 3-30-16– 2 pertaining to that contract in California. Brown represented San Diego Gas.

In a similar way, Olson dismissed Wilde’s lawsuit against Foundation Windpower, first in the dispute over Fairfield Wind, and second, over the Greenfield Wind

Source: Choteau Acantha Article – Industrial wind farm has broken ground in county-pub 3-30-16- WINData LLC

Great Falls Tribune – Construction back on track at Greenfield wind farm after delay over taxes

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B9321557714Z.1_20160330182312_000_GK7DTU0LD.1-0March 30, 2016

Construction of a 25-megawatt, 13-turbine wind farm seven miles north of Fairfield is back on track, according to the developer.

Martin Wilde, principal engineer at WINData LLC, said Wednesday that foundations are being poured at Greenfield wind farm.

“We’re moving ahead,” Wilde said.

Wilde is partnering with Foundation Wind Power of San Francisco in developing the project.

Dick Anderson Construction of Great Falls is the general contractor.

Towers and turbines will be erected this summer, Wilde said. The goal is to have construction completed by September.

“Our goal has been to keep money in Montana to help Montana communities leverage the wind power opportunities to the full extent,” Wilde said.

Greenfield wind farm is located next to the six-turbine, 10-megawatt Fairfield wind farm, which was completed in 2014.

Construction was halted at Greenfield last summer over property taxes.

At the time, Foundation Windpower said the first property tax bill for the existing Fairfield wind farm came in higher than expected.

Foundation Windpower then applied for tax abatements seeking tax breaks for both the operating Fairfield wind farm and the proposed Glacier wind farm.

An abatement means that the developer will receive a 50 percent tax cut over the first five years with taxes gradually increasing to 100 percent at the end of the 10th year.

Jim Hodgskiss, Teton County commissioner, said commissioners granted a tax abatement for the Glacier project because it still hadn’t been constructed, but denied the abatement for the Fairfield project because it already was completed.

About half of the total tax reduction for the Fairfield wind farm, or about $2 million, would have been shifted onto the rest of the tax rolls if commissioners would have approved the abatement after the wind farm already had been constructed, Hodgskiss said.

“We didn’t feel it was right to shift it back to the rest of the taxpayers after it was built,” Hodgskiss said.

Follow Karl Puckett on Twitter @GFTrib_KPuckett.

Wind farm is planned near existing wind farm north of Fairfield.

Source: Construction back on track at Greenfield wind farm after delay over taxes

Construction back on track at Greenfield wind farm after delay over taxes

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Construction back on track at Greenfield wind farm after delay over taxes Karl Puckett, kpuckett@greatfallstribune.com 3:15 p.m. MDT March 30, 2016

(Photo: Tribune file photo/Karl Puckett)

Construction of a 25-megawatt, 13-turbine wind farm seven miles north of Fairfield is back on track, according to the developer.Martin Wilde, principal engineer at WINData LLC, said Wednesday that foundations are being poured at Greenfield wind farm.“We’re moving ahead,” Wilde said.Wilde is partnering with Foundation Wind Power of San Francisco in developing the project.

Dick Anderson Construction of Great Falls is the general contractor.Towers and turbines will be erected this summer, Wilde said. The goal is to have construction completed by September.“Our goal has been to keep money in Montana to help Montana communities leverage the wind power opportunities to the full extent,” Wilde said.

Greenfield wind farm is located next to the six-turbine, 10-megawatt Fairfield wind farm, which was completed in 2014.Construction was halted at Greenfield last summer over property taxes.At the time, Foundation Windpower said the first property tax bill for the existing Fairfield wind farm came in higher than expected.Foundation Windpower then applied for tax abatements seeking tax breaks for both the operating Fairfield wind farm and the proposed Glacier wind farm.

An abatement means that the developer will receive a 50 percent tax cut over the first five years with taxes gradually increasing to 100 percent at the end of the 10th year.Jim Hodgskiss, Teton County commissioner, said commissioners granted a tax abatement for the Glacier project because it still hadn’t been constructed, but denied the abatement for the Fairfield project because it already was completed.

About half of the total tax reduction for the Fairfield wind farm, or about $2 million, would have been shifted onto the rest of the tax rolls if commissioners would have approved the abatement after the wind farm already had been constructed, Hodgskiss said.“We didn’t feel it was right to shift it back to the rest of the taxpayers after it was built,” Hodgskiss said.

Follow Karl Puckett on Twitter @GFTrib_KPuckett.

Source: Construction back on track at Greenfield wind farm after delay over taxes

North American Windpower: A Technical Overview Of The EPA’s Sweeping New CO2 Rules

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On Monday, President Barack Obama and U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy announced the roll-out of the Clean Power Plan (CPP) imposing carbon dioxide (CO2) standards on existing power plants. Given the intent of reducing CO2 emissions by 17% below 2005 levels by 2022 and 26% to 28% below 2005 levels by 2025, these rules will have a significant impact on industrial consumers of electricity, as well as on developers of fossil-fuel-fired and renewable (e.g., solar, biomass and wind) generation.

Obama has repeatedly stated his determination to regulate the roughly 40% of the nation’s greenhouse-gas (GHG) emissions that come from the energy sector. The EPA proposed rules on June 18, 2014, that would impose a complex program for regulating existing power plants. Monday’s rule brings the first stage of this rulemaking closer to a conclusion. Although the most attention is on the rules applicable to existing power plants, rules for regulation of CO2 from new and modified facilities is traveling in lockstep with the existing source rules.

Section 111(d) differs from the EPA’s conventional rulemaking authority. For new and modified power plants, the EPA simply issues standards (under CAA Section 111(b)) that are directly applicable to all new and modified affected facilities. The EPA proposed CO2 standards under CAA Section 111(b) for new power plants in January 2014 and for modified power plants in June 2014. The EPA’s 111(d) authority is more circumspect.  Rarely employed, Section 111(d) grants the agency the authority to issue emission guidelines that then must be used by the states to craft programs that are consistent with the EPA’s stated objectives. These state programs must then be approved by the EPA.  However, the guidelines are just that – options for how to create a program and not outright mandates as to what the state rules must entail. The EPA issued 111(d) standards for existing, unchanged power plants Monday that seek to establish a unique program unlike any other existing regulatory program.

The CPP establishes state-specific CO2 emission limits and requires that the states demonstrate how they will achieve those limits by the deadlines in 2022 and 2030. The concept of two-stage limits matches what was proposed in 2014. However, the EPA has extended the deadline for compliance with the initial standards from 2020 to 2022; the second-stage deadline remains unchanged at 2030. The CO2 limits are applicable to existing coal- and oil-fired power plants, as well as existing natural-gas-fired combined-cycle generating facilities – a change from the 2014 proposal.

In establishing its plan to comply with the 111(d) mandate, a state can choose to comply with one of three types of limits. First, and consistent with the 2014 proposal, a state can adopt a pound per megawatt-hour (lb/MWh) limit. Second, a state can adopt a total ton per year (tpy) CO2 cap that would apply within the state. This option was also discussed in the 2014 proposal, but no values were suggested for individual states. Third, a state can adopt a tpy CO2 cap that includes an allowance for new sources. Once the limit is established, a state must develop and implement a plan to achieve the limit. This plan can consist of either a conventional limit applicable to the electrical generating units covered by the CPP (i.e., coal- and oil-fired power plants and natural-gas-fired combined-cycle units), or it can reach “beyond the fence,” incorporating other CO2 reductions and taking credit for those when calculating compliance. It is the utilization of these “beyond the fence” measures, such as renewable energy standards and residential energy efficiency programs, to demonstrate compliance with standards applicable to power plants that fostered a lot of questions in 2014 as to the legality of the program. The EPA is also requiring a hard “backstop” limit that will automatically kick in and apply to individual regulated electrical generating units if the state program fails to achieve its intended “beyond the fence” reductions.

The EPA is clearly trying to promote nationwide or regional cap-and-trade programs.  The final rules promote emissions trading mechanisms and discuss the CPP enabling states to generate “trading ready” allowances that avoid the need for interstate agreements. Expanding on language in the 2014 proposal, the EPA speaks of individual power plants being able to meet their obligations through emission rate credits (if a rate-based standard is adopted) or allowances (if a mass-based standard is adopted). Cap-and-trade was a clear element underlying the 2014 proposed rule, but it takes on a more prominent role in the final rule.

Implementation of the program will take place over the next 15 years. As noted above, each state has a limit it must attain by 2022 and a more stringent limit by 2030. Many of these limits have changed dramatically from the 2014 proposal (e.g., the 2030 limit for Washington increased from 215 lbs CO2/MWh to 983 lbs CO2/MWh, while North Dakota decreased from 1,783 lbs CO2/MWh to 1,305 lbs CO2/MWh).  Each state must develop a plan for how it will attain these limits that must be reviewed and approved by EPA. If a state fails to propose a plan or the EPA disapproves the state’s plan, then the agency will impose requirements in that state. The initial submittals are due by Sept. 6, 2016. This initial submittal can consist of either a state’s final plan or an initial plan with a request for an extension. By Sept. 6, 2018, all final plans must be submitted. These plans must identify milestones used to demonstrate progress toward achieving the CO2 reduction goals.

The rules create the Clean Energy Incentive Program (CEIP), which provides an interesting opportunity for renewable energy developers. The CEIP allows states a mechanism to reward wind and solar projects that commence construction after a state submits its 111(d) plan to the EPA (or after Sept. 6, 2018, for states that choose not to submit a final state 111(d) plan by that date).

A project must be either located in a state or benefit a specific state to be eligible under the CEIP as part of that state’s 111(d) program. The states are required to include a CEIP implementation regimen in their 111(d) plan and account for allowances (if a mass-based plan approach) or emission rate credits (ERCs) if a rate-based plan approach. If the state does so and the wind or solar project commences construction after the state plan is submitted, then the project earns ERCs or allowances based on the quantity of metered megawatts generated in 2020 and 2021. Among renewables projects, only wind and solar are eligible. For every metered MWh generated in 2020 and 2021, the project will receive one ERC (half from the state and half from the EPA). Even states or tribal areas without any regulated generating units may provide ERCs so long as they are connected to the contiguous U.S. grid and meet certain eligibility requirements. The ERCs or allowances can be used for compliance by a regulated generating unit and are fully transferable prior to such use. A nationwide cap of 300 million tons of CO2 ERCs/allowances applies to the CEIP program (and includes ERCs/allowances awarded to low-income energy efficiency projects that reduce electricity usage in low-income communities in 2020 and/or 2021).  In order to be eligible for the ERCs/allowances under the CEIP, developers are not required to demonstrate that their project is “additional” or surplus relative to a business-as-usual or state-goal-related baseline. Many questions abound about how the CEIP will work, and the EPA does not address them in Monday’s rule. Instead, the agency plans to issue another rule with the details of the CEIP.

Stay tuned as this process unfolds in the next few days, weeks and years. The EPA’s issuance of the rules shifts the burden to the states to develop plans and triggers further rulemaking to flesh out requirements like the CEIP. There will be opportunities to get involved in the federal rulemaking, as well as with state rulemaking efforts as the states navigate this maze of requirements and work to meet the tight deadlines.

Tom Wood is a partner at Stoel Rives LLP, where his practice focuses on the Clean Air Act.

North American Windpower: A Technical Overview Of The EPA’s Sweeping New CO2 Rules.

Second wind farm going up near Fairfield

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Second wind farm going up near Fairfield

Karl Puckett, kpuckett@greatfallstribune.com 7:41 p.m. MDT May 1, 2015

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(Photo: Tribune photo/Karl Puckett)

FAIRFIELD – Construction of a 25-megawatt, 15-tower wind farm is expected to begin Monday seven miles north of here, following difficult negotiations between the developer and NorthWestern Energy, which will purchase the power.

It’s called Greenfield Wind LLC.

The Montana Public Service Commission, which had rejected a settlement agreement on the power purchase price between NorthWestern and WINData LLC on Dec. 16, reconsidered and approved the 25-year contract March 4.

Now construction can proceed.

“Getting the power contract has been the biggest challenge here,” WINData CEO Martin Wilde said at the Greenfield site.

On Thursday, stakes marked the locations where towers will begin rising in August and September. A strong breeze was blowing 18 mph, which is typical.

“This is perfect wind,” Wilde said.

The Greenfield wind farm is 1.5 miles to the east of the 10-megawatt Fairfield wind farm, which Wilde completed a year ago.

Wilde, an early pioneer of wind development in Montana, would like to see more projects like the Fairfield and Greenfield wind farms constructed by Montana-based, independent power producers, but it isn’t easy, he says.

“In this case, they kind of had it out with us, and we sort of held our own and settled,” Wilde said of negotiations with NorthWestern.

WINData has a 20-year contract to sell power generated at the 10-megawatt, six turbine Fairfield wind farm to regulated utility NorthWestern Energy.

It negotiated a 25-year deal with NorthWestern for the Greenfield energy.

NorthWestern argued that the price of the electricity, $50.49-per-megawatt hour, was too high, Wilde said, and “we fought back.”

NorthWestern always gives prime consideration to how a price will be reflected on the bills of NorthWestern’s 342,000 electricity customers in Montana, NorthWestern spokesman Butch Larcombe said.

“And a lot of times the developers have a different price in mind than we do,” Larcombe said.

The U.S. Public Utility Regulatory Policies Act of 1978 created a new class of generating facilities called “non-utility generators” or “qualifying facilities” that would receive special rate and regulatory treatment.

One of the goals was to encourage development of renewable energy.

Greenfield is a qualifying facility.

In Montana, the Public Service Commission has established two categories of qualifying facilities, Wilde said.

One is the standard size, which is a maximum of 3 megawatts. Those projects come with “standard offer” contracts, and negotiations are not required.

Qualifying facilities that are larger than the standard size require negotiations, and the Greenfield wind farm is the first large QF wind project negotiated and approved in Montana, Wilde said.

Instead of NorthWestern producing the power, Wilde said, it is purchasing green energy from an independent power producer, bringing diversity to its power mix, Wilde said. WINData carries the risk for generation, not NorthWestern’s ratepayers, he added.

When NorthWestern needs power the most is at times of peak demand, when it’s very cold or hot, Larcombe said.

“And unfortunately, a lot of times, that’s when the wind isn’t blowing,” Larcombe said. “We have concerns about the wind’s ability to meet the needs of our portfolio at this point.”

Wilde started out in the wind business in Montana in 1991. He’s owned his own companies and also worked for the U.S. Department of Energy.

He’s investigated many sites for wind potential in state. That leg work has attracted large wind developers, he said.

“We were trying to get commercial wind energy in Montana,” he said.

Today, Wilde owns WINData LLC based in Fairfield.

While Montana has seen some successes in wind development, Wilde says the development climate is poor compared to other states such as Texas.

“It’s like learning how to box in prison,” Wilde said. “It’s a difficult environment to do wind, period.”

The export of wind-generated electricity from Montana could be robust, but Wilde says the NorthWestern seems intent to stick with hydro and coal generation.

Larcombe, NorthWestern Energy’s spokesman, defended the utility’s efforts to own and purchase renewable power.

NorthWestern owns or has contracts with 17 different wind projects in Montana with a capacity of 282 megawatts, he said.

“To say we’re not interested or haven’t been involved in wind production really isn’t an accurate statement,” he said.

When NorthWestern purchased PPL Montana’s hydroelectric facilities in November, it changed the look of the utility’s energy portfolio, he said.

The dams are helping NorthWestern meet the typical needs for electricity in Montana, he said.

Wind in the Fairfield area doesn’t blow trains off the tracks, as it’s been known to do in locations such as Browning, Wilde said.

However, there is always a breeze.

General Electric turbines that produce 1.7 megawatts each will be erected at the Greenfield wind farm.

The distance from the ground to the tip of the blades will be 422 feet, or about 42 stories.

They are the largest wind turbines in the state, Wilde said.

“They lend themselves to calm but constant winds, which is the kind of wind we have here,” Wilde said.

The wind farm should be connected to the grid by November, Wilde said.

WINData is partnering with Wind Power of San Francisco, which will help to arrange financing through large investment banks, Wilde said.

It usually costs about $2 million per megawatt to build a wind farm, which would put the project in the $45 million to $50 million range.

Dick Anderson Construction out of Great Falls has been hired for the job. GE will assist in installing the turbines.

The 15 wind towers will stand on a ridge in two rows on a ridge overlooking wheat and hay fields.

The land is being leased from four property owners who will receive royalties based on production.

“So this is an additional crop for farmers,” Wilde said.

Reach Tribune Staff Writer Karl Puckett at 406-791-1471, 1-800-438-6600 or kpuckett@greatfallstribune.com.

via Second wind farm going up near Fairfield.

North American Windpower: The Year Of The Yieldco: How Last Year’s Top Finance Trend Impacts The U.S. Wind Market

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The Year Of The Yieldco: How Last Year’s Top Finance Trend Impacts The U.S. Wind Market

by Edward Zaelke Tuesday February 10 2015

The calendar year 2014 saw a number of important developments in the U.S. wind industry – possibly some of the most important developments the industry has seen in a number of years. Below, we have focused on what we see as the most significant developments in capital raising, merger and acquisition activity, and the political arena.

Although the first publicly traded vehicles – commonly known as yieldcos in the renewable energy space – came to market in 2013, it was not until 2014 that the wind industry and other renewable energy industries came to appreciate the changes that yieldcos would offer in terms of reducing the cost of capital for projects.

There are a number of factors that go into determining the cost of producing a kilowatt-hour of wind energy: the cost, efficiency and reliability of equipment; the wind resource; transmission availability; development costs; and, of course, the cost of capital. Some could argue that, unlike power generated by burning fossil fuels, for wind power, where the “fuel” is free, the cost of capital is the most important of the cost factors.

Most projects will need capital from a number of sources: developer equity, which refers to the risk capital invested by the project owner (either from its own funds or through an arrangement with a private-equity source); debt (which can be bank or bond financing at either the project or the project company level); and tax equity.

The yieldcos offer the opportunity to replace some or all of the developer equity and debt with funds that require a relatively low return.
In a typical yieldco structure, a sponsor holding several completed wind projects or other power generating assets forms a separate company to hold these assets and then sells a minority ownership interest in the separate company to investors. The assets are typically selling power under long-term power purchase agreements and, therefore, offer a reasonably predictable annual production of income.

Yieldcos also offer growth potential. In a typical yieldco, only a portion of the revenues from the projects is distributed to the investors as a dividend. Most of the income is re-invested in other renewable energy projects so that the investment can grow. How much of the income from the projects is to be distributed, and how much can be devoted to growth, varies from yieldco to yieldco but is currently between 2% and 4% annually.

If the wind and other projects in the company are successful, this low-dividend requirement should leave quite a bit of money with which to acquire other projects.

To date, there are about five companies that might call themselves public yieldcos in the traditional sense of providing income and growth, although there are also several companies structured as real estate investment trusts that are similar in structure, but offer a slightly different balance between dividends and growth.

There are also a number of other companies that are rumored to be forming yieldcos or have publicly announced the intention to do so.

It may be going too far to say that the yieldco as a vehicle for raising capital for wind projects is transformative, but it is fair to suggest that it has been impactful: The industry saw the values of projects rise in 2014, even though there was very little change in interest rates or the underlying market in comparison to the prior year. Instead, we saw yieldcos competing for good projects, which, in turn, drove up values.

The “yieldco effect” on project values comes from a number of factors. The most obvious factor may be that yieldcos are able to raise capital at lower rates and, therefore, can be more competitive in purchasing wind farms when bidding against other buyers with a higher cost of capital. Just as important, however, is the fact that, in order to continue to grow, yieldcos must purchase additional projects.

As more and more yieldcos come to market and must find new high-quality projects, the demand for projects – even between and among yieldcos – will increase. This should result in driving returns down and prices up. In 2014, while this effect was felt, it did not predominate the market.

However, as more yieldcos enter the market, it would logically seem that competition for projects would continue to increase. A third, possibly less important factor is that yieldcos have the ability to purchase projects with stock rather than cash. Again, this should give yieldcos an edge when competing for some wind assets and further drive up values.

The so-called yieldco effect was prominent in the megadeal that saw TerraForm/SunEdison acquire First Wind. TerraForm is a SunEdison-sponsored yieldco that had its initial public offering in July 2014. TerraForm was used to acquire the operating assets of First Wind, assets that will offer the TerraForm shareholders an ongoing return. SunEdison simultaneously acquired the development business, which allows First Wind to continue its successful development platform and may provide TerraForm with additional projects in the future to help grow the TerraForm yieldco.

Politics as usual
The end of 2014 in Washington, D.C., saw two significant events for the wind industry: the Republican Party’s gaining the majority of both houses of Congress and what may possibly be the shortest extension ever of the federal production tax credit (PTC) for wind energy. It is still too early to know the impact on the industry of the Republican-controlled Congress.

The PTC extension, on the other hand, was an important event for a number of reasons.  The most obvious, of course, was the extension of the period in which to “commence construction” until the end of 2014. This caused a number of companies that had hoped for a one-year extension to scramble to start construction over the last three weeks of the year. While the industry awaits guidance from the Internal Revenue Service (IRS), the industry is hopeful that this extension, in effect, extended the safe harbor completion date for all of the projects started in 2013 and 2014 until Dec. 31, 2016. Currently, the industry is waiting on the IRS as to whether that will happen.

Equally important is the manner in which the “commencement of construction” extension until the end of 2014 occurred.

As the Republicans and Democrats negotiated over the “extenders bill” toward the end of 2014, the wind industry’s proponents appeared to have struck a deal with the PTC opponents for a longer-term extension in exchange for an agreement not to seek a further extension when the longer term reached completion.

Unfortunately, the White House indicated that for unrelated reasons, it would not accept the bill that included that compromise. In the end, the wind industry ended up with the short-term PTC extension. However, the fact that a deal was tentatively reached may be an indication of things to come, so stay tuned in 2015.

Author’s note: Edward Zaelke is partner at law firm Akin Gump Strauss Hauer & Feld. He can be reached at (213) 254-1234 or ezaelke©akingump.com.

via North American Windpower: The Year Of The Yieldco: How Last Year’s Top Finance Trend Impacts The U.S. Wind Market.