Why Does the Energy Project Want the CFD?
The energy project, for example, a wind farm has high initial capital costs, zero fuel costs, and low O&M costs. The wind farm will make money and satisfy investors if it can guarantee a sufficient price for power over 15-20 years. The developer also has other income streams like Renewable Energy Certificates (RECs) whose value may vary, and a federal production tax credit that may be rescinded. The long-term financial hedge is the backbone of project development.
Click below (How Can the Financial Hedge Work in Different Markets?) for more details
