Clean Renewable Energy Bonds (CREBs)

These kinds of Bonds were signed into law in 2005 and were contained within a new Energy Policy Act.  This program is designed in such a way that electric cooperatives will have some incentive to help develop clean energy sources while on a low operating budget. The program also applies to public power systems. The program is also designed to give the PTC program, which is available to private investors, incentives as well. 

The Ins and Outs of the Program

Under this new act CREB’s can be given out by the CFC and instead of them having to pay interest to whoever holds the bond and tax credit is provided by to them instead. Whatever is earned from these bonds can then be used for financing new energy projects.  a low cost loan can then be had by electric cooperatives from the CFC for any new energy project.
What is the program for?

Renewable energy projects tend to be more costly and are sometimes considered not viable for a lot of the electric cooperatives.  When they provide this type of financing via the CREBs, this program will help to make the energy projects cost effective to the rural areas that the cooperative serves.

What exactly is renewable energy?

There are different forms of energy that qualify as renewable energy and make them eligible for tax credit.  Some examples of renewable energy are biomass, solar power, landfill gas, and hydropower.

Availability

CREB’s are going to be available for until December 31, 2009.  There have not yet been any regulations for this program by the government.  There are expected to be more regulations instilled on the program in the near future.

What is the funding going to be like?

Legislation has put a limit on maximum amounts that the bonds can be issued for. These bonds cannot exceed $800 million.  Out of that $800 million they have electric cooperatives have been ear marked some $300 million.

Why investors need to act now?

With this opportunity readily available it is important that investors act not especially if they hope to get in on those government bonds that are currently available. Funding renewable energy projects through the CREBs is possibly the easiest way to get financing to this sector.  Time is of the essence and if you wait their will be no guarantee for funding. Growth is also expected in the renewable energy sectors, hence there are opportunities for good returns on investment.

When will the funds run out?

It is anticipated that the funding will not run out too soon as funds are usually set aside to meet the future plans in the renewable energy sectors. The sector has become an important avenue in economic growth and country development.