Tax-exempt financing

Tapping into tax-exempt financing can require developers to do some hoop jumping. Nevertheless, tax-exempt debt can offer a better position in competing for power projects. Independent power developers are asking more questions this year about tax-exempt financing for power projects than ever before. With things slowing down in the domestic market, many developers are turning to municipal utilities as potential customers for wholesale power. However, it is hard to offer a municipal utility that can borrow at tax-exempt rates to finance its own power plant economic terms for a private project unless the developer can figure out how to get into the tax-exempt markets as well. Currently, there are four types of independent power facilities that can be financed in the tax-exempt bond markets, and a fifth category that qualifies for such financing in the Caribbean and Central America. Furthermore, developers continue to scour the map in search of other routes into the tax-exempt market, and sometimes they find narrow paths that work for particular projects.