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US government allocates US$2.2bn in bonds for renewable energy development

The US Department of Treasury has allocated US$2.2 billion in Clean Renewable Energy Bonds (CREB) as part of the Obama administration's efforts to spur production of renewable energy.

The Treasury Department allocates bond authority to governmental agencies, public power providers and cooperative electric companies involved in development and production of renewable energy. These bonds function as tax credit bonds which allow investors to receive federal tax credits in lieu of the payment of a portion of the interest on the bond, with the federal tax credits covering 70% of the interest on the bonds.

The allocation of US$2.2bn in Clean Renewable Energy Bonds for 805 recipients is funded by the Energy Improvement & Extension Act of 2008 and the American Recovery & Reinvestment Act of 2009. The application deadline for the new Clean Renewable Energy Bond allocations was 4 August.

“The Recovery Act's innovative bond programs provide communities around the country with financing to jump start important development projects," explains deputy secretary Neal Wolin. “Because of the Clean Renewable Energy Bonds awards announced today, energy developers will be able to access lower cost credit to help make the shift to clean renewable energy production, benefiting both our economy and our environment.”

The government received 997 applications seeking a total of more than US$3bn for renewable energy projects to be owned by governmental bodies but Treasury allocated US$800 million to 739 projects using a smallest-to-largest methodology. It received 31 applications requesting US$609m for projects from co-op electric companies and allocated the full amount to 31 projects. Another 38 applications requested US$1.4b for renewable energy projects from public power providers and it allocated $800m to 35 projects.

Treasury will consider a supplemental application round to award unallocated volume cap for cooperative electric companies.

Media reports claim the renewable energy programme benefits only companies in California, Colorado, Illinois, Massachusetts and Washington, with utilities in Washington authorised to issue the most debt at US$500m for hydropower and wind projects. Electric co-ops and government agencies in 17 states received bond allocations.

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