Wind Power in Poor Regions May Increase U.S. Access to Financing

Wind farms may become more attractive to investors because of new guidance that increases the number of banks that may participate in tax-equity financing, according to an industry group.

The U.S. Treasury’s Office of the Comptroller of the Currency now permits national banks and federal savings associations to make tax-equity investments in wind farms that are in low-income regions and provide a public benefit, according to the American Wind Energy Association.

Federal bank regulators last month approved guidelines for banks and developers to back wind farms under Public Welfare Investment authority, a policy that’s also used to finance low-income housing. That opens the door to more than 50 banks, up from about a dozen that currently participate in the tax-equity market, said Paul Holshouser, finance policy manager for the Washington-based trade group.

“There’s an untapped source of funds that we can access,” Holshouser said yesterday in an interview. “Our goal is to bring in new banks so that tax-equity yields come down.”

Many developers don’t have enough taxable income to use all of their wind farms’ tax credits and sell equity stakes to large backers that apply a portion of the credit to their own tax bills.

Allowing more banks to participate in the tax-equity market will reduce costs for developers, Holshouser said. It may also create a secondary market for current investors to sell stakes to the new banks, freeing up capital for new projects.

“In Texas, about half the existing projects could qualify for this,” Holshouser said.

The U.S. has more than 60 gigawatts of wind-energy capacity in operation, mostly in Texas, California and Iowa. That’s enough to supply about 14.7 million homes, AWEA said.

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