Folks,

Here’s my latest piece for the Green Chip Stocks subscription file, which they graciously allowed me to reprint here.

Air Force Breaks Ground on Largest Solar Farm in North America

2007-04-25

On Monday, the Air Force broke ground on what will be the largest solar farm in North America.

The 15 megawatt power plant will occupy 140 acres of Nellis Air Force Base, outside of Las Vegas.  It will generate about 25 million kWh annually, providing about 25% of the electric needs of the base, where more than 12,000 people work and over 7,000 live.

The Air Force expects to save $1 million a year on their electric bills, while helping to fulfill its commitments to deploy more renewable energy.

And best of all, they didn’t have to front a dime for the $100 million project.

It’s true.

The project is being built through a creative collaboration of four partners…

• The PowerLight subsidiary of SunPower Corp.
• Financed by MMA Renewable Ventures, a San Francisco financier of renewable energy projects
• Connected to the grid via Nevada Power, the local utility
• Hosted by the Air Force.

And the reason the Air Force doesn’t have to pay anything up front for the project is due to MMA Renewable Ventures’ interesting third-party approach to financing solar projects.

This isn’t a traditional approach…but still, quite profitable!

Essentially, the company strikes a Power Purchase Agreement (PPA) with the customer, under which the solar project is installed at the customer’s site at no cost. In return, the customer agrees to buy their power at lower-than-utility rates from MMA Renewable Ventures, who buys, owns, and operates the solar system.

In addition to the steady stream of utility revenue that Renewable Ventures will enjoy, Renewable Ventures also gets to claim the 30% tax credit…in this case, about $30 million worth!

Not bad at all.

And what makes the deal even sweeter is that they can sell the renewable energy credits (RECs) generated by the solar system to Nevada Power, to help meet the utility’s portfolio standards for renewable energy.

Now Renewable Ventures’ parent company is Municipal Mortgage & Equity, LLC (“MuniMae”), which happens to hold an $18 billion portfolio (the fourth largest in the US) in debt financing, and clean energy investments.

And currently, MMA Renewable Ventures owns 1 MW worth of renewable generating capacity in the U.S., making them arguably the largest provider of institutional investment capital to the renewable energy sector.

The project also makes sense for Nevada Power, who needs to meet the Nevada renewable portfolio standard (RPS) of getting 20% of its power from renewable energy sources by 2015.

The Nellis project will enable them to meet their goals six years ahead of schedule.

As part of the deal, Nevada Power will subsidize the lower electricity rates offered to the Air Force by making payments to Renewable Ventures.

According to Nevada Power executive Thomas Fair, between the Nellis project and a 64-megawatt solar thermal power plant now under construction in Boulder City, Nevada will have the highest solar energy production per capita in the entire country.

"The fact that the military is taking a big leap into the renewables arena is significant," said Don Soderberg, chairman of the Nevada Public Utilities Commission.

MMA Renewable Ventures’ CEO Matt Cheney says the Nellis project is only the beginning: "In collaboration with our pioneering customer and partners, we have set a precedent of success with the Nellis project that we look forward to replicating at federal installations throughout the United States."

All in all, it’s another outstanding win-win for solar!

Until next time,

Chris Nelder