Tag Archives: financing

Supreme Court Patent Ruling is Good News For Cleantech Business Models

By Rodger Sadler, partner and Chi Cheung, associate, at Orrick, Herrington & Sutcliffe in New York.

The U.S. Supreme Court?s recent decision in Bilski v. Kappos is good news for clean energy innovators. The Bilski ruling ensures that the door to patenting business method inventions remains open, ending months of speculation that the Court might find such inventions categorically unpatentable. It helps ensure that our patent protection system stays robust, and this will spur innovation and attract the investment capital needed for research, development, and commercialization of clean energy technologies. Continue reading Supreme Court Patent Ruling is Good News For Cleantech Business Models

The Treasury: clean energy’s new VC

While the size of the stimulus — $787 billion — and its green slant have been widely covered, little has been said about some of the more fundamental structural changes brought on by this package.

One, is a provision that will see the federal government directly fund  renewable energy projects via nontaxable, direct cash payments from the Treasury Department. The stimulus allocates about $40 billion for clean energy investments, for more on this, see here.

This funding provision will help reshape the “way in which U.S. renewable/alternative energy assets are financed,” wrote international law firm Winston & Strawn in a recent briefing put together by its tax and energy practice.

Until the economic crisis, one common funding source for clean energy projects included tax credits. Because many developers did not have large enough profits to benefit from these fiscal incentives, they turned to financial institutions which in exchange for the credit opened the funding tap. With the economic crisis, that funding route has  all but evaporated.

The government grants will be made available for projects that either go in service in 2009 or 2010, or if construction on the projects  start in 2009 or 2010, says the Winston briefing.

With this hands on approach the firm ponders whether, moving forward there will even be  a role for tax equity investment structure.

The firm writes:

“With the advent of the Stimulus Act… the first question that has come to the minds of many developers and investors in renewable energy is whether there continues to be any need for any investment financing structures (with their expense and complications) at all. Instead of depending on an institutional equity investor to provide capital, based on its ability to use Production Tax Credits (PTC) or Investment Tax Credit (ITC), the thought is that the developer could simply collect an amount equivalent to the ITC from Treasury under the grant program and otherwise finance projects through more traditional, non-tax oriented sources.”

Winston adds that the government funds are only temporary and the coming months will provide a “better sense of what the market will adopt as the best financing structure” over the long-term.

Go to the Winston & Strawn briefing

Ausra shrinks big solar plan; to focus on smaller, cheaper projects

When Ausra moved from Sydney to California 12 months ago it had big plans. Backed by leading Silicon Valley financiers and $40 million in fresh financing, the company was going to pepper the hot California desert with very large, utility-scale solar generation power plants.

What a difference year makes, hammered by the credit crisis, the Palo Alto, Calif. company is scaling back.

This month it laid-off 10% of its 108 employees and decided, at least for the time being, to shift away from utility-scale developments to instead develop smaller and cheaper projects.

Ausra still thinks that there is a business for large-scale solar power plants but at a cost of around $1 billion, in this financial climate such projects are not viable.

Ausra CEO Bob Fishman told the San Jose Mercury News that the strategy shift was a direct response to the poor state of the credit markets.

“What a lot of people thought when they went out and signed 500- or 900-megawatt power-purchase agreements was that it was easy to go from a 1-megawatt demo plant to a 900-megawatt project. That’s simply not reality. The finance market will not support it.”

Yesterday, SunPower, the San Jose, Calif. maker of photovoltaic solar equipment, said that it would also downsize its projects and “repackage” its large solar power installations into smaller pieces as a way to win financing.

Citing a company spokeswoman, Martin LaMonica at CNET writes that Ausra? could sell turnkey solar fields as part of an existing coal or natural gas power generation facility. The clean electricity would then help offset the plant’s CO2 emissions.

According to Fishman, Ausra plans to complete its 177 MW Carrizo Energy Solar Farm on California’s central coast and another one in Arizona. But, reports Todd Woody on the Green Wombat blog:? “the company has quietly let drop a Florida project for utility FPL and is negotiating to offload lease claims? in Arizona and Nevada.”

Ausra scales back plans to build huge solar plants (San Jose Mercury News)

Financing woes shrink Ausra’s big solar plans (CNET News)

Big solar gets smaller (Green Wombat)