The Sacramento Municipal Utility District decided to sell a wind farm that it’s building so that the project can qualify for tens of millions of dollars in federal funding. On Sept. 15, SMUD’s board voted to enter negotiations to sell the Solano 3 Wind Project to Citigroup Global Markets, the brokerage and securities arm of banking corporation Citigroup. “There are several benefits to transferring ownership of the project to a taxpaying entity, including qualifying for federal grant incentives up to 30 percent of the fair market value of the facility,” said board member Larry Carr. Construction began in June on Solano 3, a 128 MW wind farm that would consist of 55 wind turbines sitting on about 4,200 acres of land in the Montezuma Hill region of southern Solano County. The output would more than double the wind capacity of the first two phases of the project, which equal 102 MW. SMUD says selling the project to a for-profit entity would allow it to qualify for about $78 million in federal stimulus funds earmarked for renewable projects, money for which the non-profit municipal utility doesn’t qualify. Under the agreement, SMUD would buy back the full output of the facility if it’s sold. The muni also would have the option to buy back the facility at a future date, Carr said. The total cost of the project is $275 million, with the utility having committed over $148 million to it, according to an asset purchase and sale agreement prepared by SMUD. If a contract is signed, that amount would be credited toward future energy purchases from the wind farm. Citibank would pay about $50 million. The rest of the cost would be covered by a $78.3 million federal grant. The sale is expected to close in December and construction is expected to be complete by March.
