Alternative Windpower Ownership Structures: Financing Terms and Project Costs

We analyze the costs of utility-scale windpower projects under different types of ownership structure and market scenarios. Specifically, we compare the nominal levelized 20-year cost of windpower under three general types of ownership and financing structure: (1) private ownership, project-finance; (2) investor-owned utility ownership, corporate-finance; and (3) public utility ownership, tax-exempt bond finance. The final category, public ownership, is split into two financing arrangements, namely internal- and project-finance. The key difference between these two financing types is the extent to which the public utility provides additional security and collateral to the lender other than the power project itself and its power purchase contract. To model the cost and financing variables, we developed three 20-year financial cash-flow models (one for each of the ownership and financing arrangements) using a hypothetical 50 Megawatt (MW) windpower facility with specified operating and cost inputs. Each spreadsheet model was developed to replicate as closely as possible actual utility and developer cost estimation techniques: (1) a pro-forma cash-flow model is used to assess private ownership, project-finance arrangements; (2) a revenue-requirements model is developed for the IOU ownership and finance scenario; and, (3) a cash-flow model is created to evaluate the public ownership scenarios.