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Excerpted from Solutions News Extra, October 21
, 2005
Thirteen electric cooperatives have asked CFC to issue Clean Renewable Energy Bonds (CREBs) on their behalf to finance renewable energy generation projects. On October 18 the CFC Board of Directors authorized issuance of $253 million of CREBs to finance qualified renewable generation projects for the 13 cooperatives.
CREBs were part of the Energy Policy Act of 2005, signed into law on August 5, 2005. The legislation authorized CREBs for two years beginning in January 2006.
CREBs provide electric cooperatives and public power systems with an incentive comparable to production tax credits. Production tax credits are available to IOUs to finance project costs to install new renewable generation capacity.
Investors in CREBs receive a tax credit from the federal government in lieu of an interest coupon. Essentially, the bonds offer cooperatives zero-interest loans for financing qualified energy projects. Qualifying projects are listed in Table 1, below.
The Energy Policy Act capped the total amount of bonds that could be issued at $800 million, with at least $300 million reserved exclusively for electric cooperatives. Before the CREBs can be issued, the U.S. Secretary of the Treasury must approve them pursuant to the allocation in the Act. Requirements for CREBs are listed in Table 2, below.
Table 1: CREBs Qualifying Projects |
| wind facilities |
landfill gas facilities |
| closed-loop and open-loop biomass facilities |
trash combustion facilities |
| geothermal or solar energy facilities |
refined coal production facilities |
| small irrigation power facilities |
qualified hydropower facilities |
| Table 2: Requirements for CREBs |
| Approval by U.S. Treasury Secretary |
| Bonds issued by qualified issuer |
| At least 95% of proceeds for capital expenditures |
| Qualified issuer must designate bonds as CREBs |
| Bond must comply with expenditure rules |
CFC Extranet Members: Click here for a Q&A on CREBs.
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