A $400 million wind energy project aimed at helping Southern California public utilities ramp up their use of renewable energy and cut greenhouse gas emissions is caught in the national financial crisis. To keep the project moving, the munis appear poised to purchase it if the developer, First Wind, cannot secure financing. \u201cWe\u2019ve had to go down a different path due to a lack of equity,\u201d explained Craig Kohler, Southern California Public Power Agency finance and accounting manager. Kohler said the agency may need to rethink how it structures other renewable energy projects as it strives to go green in an unstable financial environment. First Wind\u2019s plan to build the 203 MW Milford Wind project in Utah stalled late last year after the company broke ground. It suddenly found it could not obtain a tax equity partner, namely a financial company willing to invest in the project in return for enjoying the associated federal energy production tax credits. To keep the project moving, the board of the Los Angeles Department of Water & Power, the largest of the three munis involved in the deal, approved proposed contract amendments February 3. The changes would obligate Southern California Public Power Agency, which orchestrated the agreement on behalf of the munis, to purchase the project if First Wind cannot secure financing to complete Milford. The amendments to the 2007 deal also provide First Wind three more months before it must pay liquidated damages, although they double the cap on those penalties to $14.4 million. The changes further would extend the default date nine months to June of 2010, although they also would squeeze down the base payment for energy from the plant should it go forward with financing arranged by First Wind. In another change, if the power agency has to buy the plant, it would take control of a planned transmission line from the Milford site\u2014which First Wind has hoped to eventually build out to 1,000 MW of capacity\u2014into the Intermountain Power Plant. The Southern California Public Power Agency\u2014which has 12 public power agencies as members\u2014lined up the contract with First Wind on behalf of the LADWP, Pasadena Water & Power, and Burbank Water & Power in a 2007 agreement. In that deal, the three public utilities entered into 20-year power purchase agreements for the electricity from Milford. LADWP is to take 185 MW, Burbank 10 MW, and Pasadena 5 MW. Initially, the project was to be completed by the end of 2008 and deliver wind energy integral to meeting municipal renewable energy goals. LADWP, for instance, is seeking to hit a goal of 20 percent renewable energy in 2010. With the evaporation of financial industry profits and mounting losses, investment houses are lending less. That has shrunk the benefit from the renewable (mainly wind) production tax credits\u2014which lower tax liability\u2014since their tax payments have declined if not disappeared due to a lack of profitability. The resulting demise of tax equity investment has left renewable energy companies in the lurch across the nation. The full impact of the financial problems in California, as the state strives to reach a 20 percent renewable energy target by next year, is largely unknown due to the confidential nature of project agreements between developers and investor owned utilities. \u201cThe wind industry is certainly experiencing a hard time securing tax equity financing,\u201d said John Lamontagne, First Wind spokesperson. Lamontagne declined to comment on the specific problems the Milford project faces. First Wind is privately held and has a policy of not discussing its finances. However, the public nature of the contract between First Wind and the Southern California munis provides a clear glimpse into what may be happening across the renewable industry. A 2007 SCPPA report shows that the munis planned to prepay $269 million for energy from the plant and that the developer was to contribute $30 million of its own funds to the project and obtain $110 million from a tax equity investor. After the production tax credits\u2014which run 10 years\u2014expired, the munis had the option to purchase and operate the wind plant, which is to be tied into the switching station next to the coal-fired Intermountain Power Plant. That controversial coal plant has long supplied many Southern California munis over a dedicated transmission line. However, growing problems in financial markets caused First Wind to lose a construction loan it arranged, wrote LADWP chief executive officer David Nahai in a February 3 memo to the muni\u2019s board of commissioners. First Wind planned to repay the construction loan with the proceeds it hoped to line up from a tax equity investor. Unable to obtain such an investor, First Wind would face payment of liquidated damages of up to $7.2 million to the munis at the rate of $40,000 per day beginning March 30 unless it can finish building the project by that date. If it cannot bring project online by next fall, First Wind would be considered in default under the contract. Construction at the site stopped within weeks of groundbreaking, said Lucas Lucero, Bureau of Land Management project manager. Lamontagne acknowledged it would take almost a year to build the plant. While LADWP approved the amendments to the agreement that would ease First Wind\u2019s troubles, Pasadena Water & Power still has to consider them, said Shari Thomas, Pasadena\u2019s finance director. Pasadena aims to increase its supply of renewable energy to 10 percent by 2010 and 20 percent by 2017. It stood at 8.7 percent last year. On the other hand, Thomas said, \u201cWe\u2019re looking at what it means to us in terms of cost of power and our financing options.\u201d A federal fix\u2014under consideration in Congress as part of pending economic stimulus legislation\u2014could help the project by providing grants of up to 30 percent of project costs to renewable power developers. \u201cIt will certainly go a long way toward helping,\u201d said Thomas. While details are still fluid, Congressional leaders hope to send the bill to the President\u2019s desk later this month.