News: CREBs, E.ON again, climate change redux

There’s a new case of the CREBs in California, as in clean renewable energy bonds. The state’s treasurer Bill Lockyer announced the sale of $20 million under the CREB program to install solar panels in 70 California Department of Transportation facilities.

The solar installations will save state taxpayers more than $52 million in energy costs over the 25-year life span of the equipment, Lockyer says.

“This project is a great example of how to use innovative financing to green state government, make it more cost effective for taxpayers and bolster businesses and jobs in a vital sector of our economy,” he adds.

California’s Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) sold the tax-credit bonds last week on behalf of Caltrans. They have a 1.45 percent interest rate over the 15-year term of the bonds. Total debt service costs over that span will total $22.5 million, and over that period Caltrans will save $24.7 million on its energy bills. Over the 25-year lifespan pf the photovoltaic solar panels, energy costs savings will come to $52.5 million, with $27.8 million coming after the bonds are repaid.

The deal is the authority’s first use of the CREB program, which was created by the Energy Tax Incentive Act of 2005. CAEATFA is also authorized to sell this type of bond under a similar program, called NCREB, established by the American Recovery and Reinvestment Act of 2009. The federal deadline for NCREB applications under ARRA is August 4.

Under the program the federal government pays bondholders up to 100 percent of the interest directly in the form of a tax credit, and it allows borrowers to get financing with a minimal interest rate.

The program has a volume cap of $2.4 billion and eligible projects include wind energy, closed-loop biomass, open-loop biomass, geothermal energy, solar energy, small irrigation power, landfill gas, trash combustion, marine and hydrokinetic energy, and qualified hydropower facilities. Projects must be owned by a “public entity” such as state or local government; public power provider; tribal government; or a cooperative electric utility company.

Sounds like a great opportunity. This Friday (June 19) the California Debt and Investment Advisory Commission and the California Infrastructure and Economic Development Bank will host an all-day event to discuss the bond program and their interface with ARRA. Register online here.

More on E.ON

Last week we wrote about the German utility E.ON’s first venture into solar with its launch of a solar farm in southern France. Today the company said it is selling 13 hydroelectric plants located on the Inn River in southeast Germany to Verbund, an Austrian electricity company.

Financial terms of what amounts to a swap arrangement were not disclosed. E.ON says Verbund submitted the most attractive bid. The deal will ensure the continued operation of the Inn River plants, which have an aggregate capacity of 312 megawatts (MW) and annual output of about 1,800 gigawatt-hours. The two companies signed the agreements for the deal last Friday evening (June 12) in Munich.

In exchange, E.ON will receive rights to procure electricity over a 20-year period from Zemm-Ziller pumped-storage hydroelectric plants in Austria’s Ziller River Valley, plus cash compensation. These procurement rights represent about 318 MW of the plants’ total capacity, E.ON said. Verbund will continue to own and operate the plants, but E.ON will be able to make use of the procurement rights to suit its needs. The transaction is subject to the approval of E.ON Supervisory Boards and antitrust authorities. Verbund’s Supervisory Board has already approved the deal.

The sale of the Inn River hydro plants represents another step to implement a commitment E.ON made to the European Commission last year to sell bout 5,000 MW of generation capacity and its ultrahigh-voltage transmission system in Germany “in order to further stimulate competition on Europe’s energy market.”

As part of this process, in December E.ON signed a memorandum of understanding with Belgium’s Electrabel to swap generation capacity and recently transferred stakes in certain power plants to Germany’s EnBW.

Including the Verbund deal, E.ON has now concluded agreements to sell a total of about 3,200 MW of generation capacity to deliver on its commitment.

Verbund operates storage and run-of-river hydropower plants with a total capacity of more than 6,600 MW, has 500 MW of hydropower plant projects under construction and another 550 MW in the planning stages up until 2015. The company recently announced a $730 million investment package for extending and modernizing existing hydro facilities and for building new ones.

Climate change: Worsening

We’re still losing ground (and air and sea) on climate change. The U.S. Global Change Research Program today released a new scientific assessment on the likely impact of global warming on the United States.

It’s not a pretty picture, but then we knew that. The report, “Global Climate Change Impacts in the United States,” warns of longer, more severe droughts, increasingly severe heat waves, rising sea levels, and many other negative developments as a result of unchecked global warming.

Commenting on the report, Carl Pope, executive director of the Sierra Club, said: “This report confirms much of what we already knew, that there is an overwhelming scientific consensus that global warming is real, is happening now, and will have severe consequences if left unchecked.  What is new, is that it explains in exhaustive detail how runaway global warming will impact us and our children right here in the United States if we fail to act.

“This report is also further proof of this administration’s commitment to putting science first, something that stands in marked contrast to its predecessor.

“In view of this new and troubling assessment of the challenge we face, it is essential that Congress move without delay to pass a strong clean energy jobs plan.  Such a plan will not only rebuild our economy with millions of new clean energy jobs and break our dependence on oil and coal, it will help us avert the most catastrophic impacts described in this report.

“Right now, Congress has the opportunity to solve both today’s economic crisis and the looming environmental calamity we face by passing a strong, comprehensive clean energy and climate bill that is up to the task before us.”

And that’s ‘nuff said for today.