What role does the finance organization have in terms of compliance work for the assets in your portfolio?
Take our Red Hills wind project. I have two tax-equity investors and a lender. We have the monthly compliance of reporting to them. We do their tax returns and financial reporting. If we amend a contract, we have to make sure that what’s stated in the amendment is going to happen: it’s a 20-year living asset. We need to make sure we’re in compliance with that financial commitment we made to them as long as they’re continuing to do this.
Internally speaking, how is your company structured?
The closest business to what we do is a real estate company. But we invest in wind or solar companies, and they’re actually little limited liability companies. If you have a land lease, it’s not with Acciona Wind Energy, it’s with Red Hills. Each one of our projects is a little self-contained box that’s that particular asset. But even if we’re a portfolio company that raises the capital for a number of projects, we have a balance sheet and we raise corporate debt: that’s how we have to think about running and managing our business.
Do you tend to be an owner, a part-owner, or just an operator on these projects?
If it weren’t for the tax quirks in the U.S., Acciona would be what it typically is — a long-term owner-operator of wind projects. We try to bring in tax investors who monetize the project because they can get a majority of the tax attributes. Our financial structures let us become the majority long-term owner after the tax investors have gotten their investment, because they’re not long-term owners. So we run our projects like we’re the long-term owner. The investors also have the opportunity to flip down to a 5% ownership after they’ve gotten their return when the tax benefit runs off, in 7 to 10 years.
How many banking relationships do you have?
A lot. Globally, Acciona attracts banks that want to be relationship-oriented with an organization where they can have a long-term stable of lending activities. In the U.S., in addition to managing relationships with the project-finance arms of our global [financial] institutions, I’ve focused on bringing in new U.S.-based institutional investors to diversify and bring more capital to our activities: the life insurance companies, the John Hancocks, and the Prudentials.
Any pension funds?
We have not had any pension funds yet, but I’m talking to some because everyone’s heard that renewable energy now is sustainable. The financial crisis wasn’t caused by renewable energy; it’s actually been a very attractive and stable sector for investment. Pension funds need a long-term asset. They have a special interest, because some of them are labor oriented and may represent unions. And they’re saying, oh gee, renewable energy is creating jobs; if we invest in that sector, we’re a huge growth engine for new jobs.