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Ex-Im Bank and OPIC financing opportunities for renewable energy

Mustafa Ostrander

05 June 2012
Ex-Im Bank offers favorable financing options to facilitate the export of U.S.-produced renewable energy goods and services. These financing options, and Ex-Im Bank’s commitment to expanding its portfolio of renewable energy financing, make Ex-Im Bank an attractive source of financing for international companies seeking to purchase U.S.-made renewable energy products and services.

OPIC provides medium- and long-term financing to renewable energy projects in developing countries and emerging markets, with a particular focus on high-impact projects. OPIC is able to provide direct loans and loan guarantees on favorable terms in circumstances where securing long-term financing on the private market is difficult or non-existent.

Ex-Im Bank renewable energy program

Through its Environmental Exports Program (EEP), Ex-Im Bank offers pre-export working capital guarantees, export credit insurance, repayment guarantees for loans up to 18 years, low interest rate direct loans, and capitalization of interest during construction.

Pre-export working capital guarantees reduce the risk for lenders to U.S. companies, allowing those companies to invest in export-related activities. Ex-Im Bank loan guarantees to international lenders also provide unconditional U.S. government repayment guarantees for loans up to 18 years for the purchase of U.S.-made renewable energy goods and services. Guarantees can be made for loans to a foreign buyer of up to 85% of the U.S. export content, with either floating or fixed interest rates, and in major foreign currencies.

Ex-Im Bank direct loans to foreign buyers are an efficient source of financing for international buyers of U.S. renewable energy goods and services. Loans made on a limited recourse project finance basis are typically to a special purpose vehicle borrower, and repayment is made from the project’s cash flows. Financing is available for up to 85% of U.S. content and up to 30% of local costs of the export contract value. The buyer must provide at least 15% of the cost of the contract, but this may be borrowed from another lender or the exporter. Ex-Im Bank offers favorable minimum fixed interest rates based on a 1% spread over U.S. Treasury notes that currently range between 1.51-3.37%, depending on the repayment term.

OPIC renewable energy financing

OPIC’s Renewable Energy Program offers direct loans and loan guarantees to medium- and long term projects in developing countries and emerging markets, with a priority interest in the Middle East and sub-Saharan Africa, particularly in markets where regulatory conditions are favorable to investment in renewable energy.

To be eligible for OPIC financing, the project must have a meaningful connection to the U.S. private sector, ordinarily interpreted to require U.S. involvement in an amount equivalent to 25% of the project’s equity. To qualify as the U.S. private sector participant in a project, U.S. entities must be at least 25% U.S. owned, while foreign entities must be majority U.S. owned. Additionally, the project must meet OPIC’s investment policy criteria, which focus on the project’s positive environmental, social, and economic impact.

OPIC is able to make direct loans to small and medium-sized businesses with annual revenues of less than $400 million, and provide loan guarantees to larger businesses. Direct loans and loan guarantees are available for amounts ranging from $100,000 to $250 million, though larger amounts may be authorized in some cases, and for tenors of up to 20 years depending upon the project economics. For renewable energy generation projects with an acceptable offtaker, financing is available for up to 75% of the total project costs, including all hard costs and soft costs necessary to achieve successful operation.

See our recent Client Alert for further details.

Mustafa Ostrander

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