The term “renewable energy” describes energy that comes from natural resources that are naturally replenished, including solar energy, wind energy, geothermal energy, bio-energy, wave power, tidal power and hydroelectricity. Although the concept of renewable energy is not a new one, several factors, including global warming, the political climate, renewable portfolio standards (“RPS”) and cap-and-trade regulations, the scarcity of other natural resources and investor interest have spurred a flurry of new activity among developers, governmental entities, investor-owned utilities and infrastructure and clean energy funds, as well as other financing participants towards developing renewable energy projects. Renewable energy projects are now being built throughout the country (and the world) at a pace that has never before been seen. Governments at all levels (federal, state and local) are increasingly motivated to have renewable energy projects built and havebegun providing assistance (such as eligibility to use tax-exempt bonds, grants, tax credits, lower interest loans and other incentive programs) to developers of renewable energy projects and other project participants that are consistent with those goals. Developers are becoming more sophisticated in using these government incentive programs to generate the equity and/or debt they need to finance their projects.

This pamphlet is designed to introduce or broaden the understanding of developers, state and local agencies, investment banks, financial advisors, investment funds, banks, operators and other participants to the financing component, with particular emphasis on tax-exempt bond financing, as well as certain other “tax advantaged” tools in the financing of renewable energy projects, including tax credit bonds, tax credits and other governmental subsidies. The primary focus of this pamphlet will be on the financing of renewable energy projects, but will touch on energy efficiency projects as well.