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12/5/2003 Global Energy Concepts, LLC 1 of 11
Characteristics of Financeable Wind Energy Projects
Northwest Power and Conservation CouncilWorkshop on Wind Energy and Electric
Power SystemsDecember 5, 2003
Kevin J. Smith, PEGlobal Energy Concepts, LLC
5729 Lakeview Dr, Suite 100Kirkland, WA 98033
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Overview
• Wind Resource and Energy Projections
• Land Acquisition
• Permits and Approvals
• Transmission/Interconnect
• Power Purchase Agreement/Purchaser
• Turbine Equipment/Supplier
• O & M Approach
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Wind Resource and Energy Projections
• Reducing Uncertainty Increases Financeability– Long-term, high quality on-site data to characterize
seasonal variations and terrain effects
– 10-minute turbulence and shear data
– Hub-height?
– Good correlation to long term reference
– Well documented anemometry
– Detailed and well documented analysis
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Uncertainty AnalysisAnemometer
Correlations
Losses and Others
Net Annual Energy Production
Prob
abil
ity
of
Occ
urre
nce
• Lenders focus on energy production estimate associated with 90% or greater confidence level of being exceeded.• Less uncertainty increases the energy production estimate associated with 90%+ confidence level.• Higher energy production level increases debt capacity
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Land Acquisition
• Long term access to the land must be secured• Lease agreements are most common• Agreements must be transferable in event of
property sale.• Carefully research land ownership• Title due diligence• Consider wind easement on surrounding land?
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Permit and Approvals
• Ensure all required local, state, and federal permits are in place and project is in compliance
• Complex review and approval process can adversely impact project’s ability to obtain financing
• Local project acceptance concerns• Zoning, building permit, set back requirements
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Transmission/Interconnect
• Completed utility interconnection study
• Completed grid congestion study
• Interconnect agreement that provides long term and reliable access to the market
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Power Purchase Agreement• Products
– Energy, capacity, attributes, ancillary services– “Take All” when available
• Price– Fixed with annual escalation (inflation) preferred
• Term– Longer term, more likely to obtain financing– 20 years (expected project life)
• Delivery– Scheduling requirements must accommodate intermittent non-
dispatchable generation.• Lender Step-in Rights
– Allow lender ability to assume project control to corrected operating deficiencies before termination.
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Power Purchaser
• Purchaser must be credit worthy – B rating or better.
• Not on ‘watch list’ for potential downgrade
• Parent company guaranty
• Letter of Credit or 12 months of payments in escrow
• Reputation
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Turbine Equipment/Supplier
• Proven turbine models with multiple year operation history
• Site suitability analysis• Turbine certified by IEC, DNV, or GL • Warranty terms• Financial health of supplier• Experience and reputation of supplier in the
industry
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O & M Approach
• Project Owner vs. O & M contractor
• Past O & M experience
• Financial health of O & M contractor
• Attainable performance goals with penalties
• Long term
