Project Type(s): Energy, Green, Infrastructure, Timber, Wood, and Agriculture, and Utility
Project Year: 2015
CDE(s): Central Valley NMTC Fund
NMTC amount: $5,820,000
Total Project Costs: $6,755,484
The project is a first-in-nation renewable energy operating business that uses Sierra Nevada forest waste as its feedstock to produce electricity. The electricity will be used in an adjacent industrial park (a former Brownfield site) that focuses on the manufacturing of forest-originated products. The utilization of this forest waste is an imperative for the State and USDA to reduce fire hazard in the Sierras. In 2015 Governor Jerry Brown issued an emergency proclamation that specifically called for the development of forest waste-to-fuel plants as a specific strategy in his initiatives for healthy forests.
This is a project that truly meets the 'but-for' test. The $7.5 million in capital cost is funded primarily through a California Energy Commission grant of $5 million and in-kind cash and material contributions of $1.3 million. Due to the startup nature of the business, limited balance sheet, new technology, special equipment and remote location, debt financing was not available and equity financing was prohibitively expensive. In fact, a public finance consulting firm utilized by the developer was unable to raise the gap financing through any of its own channels, including USDA B&I programs, tax-exempting bonding, etc. new markets filled the gap perfectly. A $6 million NMTC allocation produced a $1.2 million benefit and subsequent to closing, the project was able to break ground.