Last week, the Internal Revenue Service (IRS) announced that 610 projects have been given the authority to issue Clean Renewable Energy Bonds (CREBs) to help finance renewable energy development across the country. State and local governments and municipal and cooperative utilities were eligible to apply.
Rules prohibiting the IRS from disclosing taxpayer specific information prevents the IRS from providing a listing the successful projects. Applicants are currently being notified about the results.
General information regarding the allocations of the CREBs volume cap is as follows: Projects for the governmental borrowers will receive allocations in 24 states and projects for the cooperative borrowers will receive allocations in 22 states. The allocations for the governmental borrowers range from $23,000 to about $3.2 million and for the cooperatives ranged from $120,548 to $31 million.
Of the approved projects for the governmental borrowers, 401 are for solar facilities, 99 for wind facilities, 23 for landfill gas facilities, eight for hydropower facilities and one for an open loop biomass facility. Of the projects approved for the cooperatives, 33 are for solar facilities, 13 for wind facilities, 13 for landfill gas facilities, 12 for open-loop biomass facilities, six for hydropower facilities and one for a refined coal production facility.
Overall, there were 709 total applications from 40 different states and the District of Columbia requesting allocations for authority to issue approximately $2.6 billion in CREBs to finance 786 projects. There were 231 proposed projects in California, 67 in New Mexico, 64 in Minnesota, 41 in New Jersey, 38 in Montana, 27 in Colorado, 24 in Massachusetts, 13 in New York and 12 in Ohio. The size of the proposed projects in the applications ranged from $23,000 to $80 million.
Governmental borrowers submitted applications for about $2 billion of CREBs to finance 701 projects with an average project size of about $2.9 million. Cooperative borrowers submitted applications for about $554 million of CREBs to finance 85 projects with an average project size of about $6.5 million.
The CREBs program was created under the Energy Tax Incentives Act of 2005. Internal Revenue Code Section 54 authorizes the Secretary of the Treasury to allocate an $800 million volume cap in tax credit bonds to fund projects that can generate clean renewable energy.
The large number of approved projects is encouraging. The reason for this is that the IRS determined early on that they planned on allocating CREB authority based on a “smallest-to-largest” project amount methodology beginning with the project requesting the smallest dollar amount and proceeding thereafter to projects for successively larger dollar amounts until the total national volume cap is consumed. It was an excellent methodology and provides a model for running similar programs in the future.