VideoYou might not expect to spot a finance chief on Capitol Hill, jawboning senators and representatives. Yet that's where Susan Nickey of Acciona Energy North America found herself on February 11, just two days before Congress passed the American Recovery and Reinvestment Act, better known as "the stimulus bill." The only CFO among a group of wind-power advocates, she was holding forth on the need to spur capital investment in renewable energy.
Unlike most other finance chiefs, Nickey feels that an important part of her job consists of making things happen in Congress. Thus, she's found herself nose to nose with the likes of California Sen. Barbara Boxer and has joined a number of policy-oriented committees of the American Wind Energy Association aimed at boosting the financing of renewable-energy projects. "The biggest challenge and the most difficult issue that I need to work on is to get Washington to think about the energy policy and the legislation in terms of its having has to work for the capital markets. Our work is so capital intensive," she says.
Her main reason for such work: a major source of project financing isn't up to producing the growth the industry needs to stay viable. Up until now, wind, solar, and other alternative-energy efforts have been funded heavily in the United States via tax credits given to investors in such projects. Investment banks like JPMorgan and GE Capital, which tend to report huge profits, are in the market for deals that will provide them with tax credits to slim down their tax liabilities.
In contrast, project developers and owners like Acciona, the Spain-based parent company of Acciona Energy North America, don't have a big-enough U.S. tax base to make efficient use of the tax credits.
Thus investment bankers and big commercial banks like Citigroup have been moved to take equity stakes in tax-favored renewable energy projects. But the amount of funding unleashed by a tax-based national energy project is limited, especially since the nation's investment banking sector was walloped by the global financial crisis, Nickey notes. What's more, the current tax-oriented financing system for renewable energy is "overly complex, restrictive and [provides] a too-small pool of available capital," she says.
Currently, she's most worried that the U.S. Treasury Department won't continue supplying the cash refunds mandated by the stimulus bill for qualified renewable energy facilities. The amount of a grant generally equals that of the investment tax credit the owner otherwise would have been eligible for (usually 30% of the qualified cost of the project).
- "We have an expression: we ring the bell. We ring the bell when we have a success, like a financial closing or a power-purchase agreement. I hope to be ringing the bell a lot." — Acciona Energy North America CFO Susan Nickey
She sees such funding as a "bridge" from a system based on tax incentives to "the enactment of a stable, long-term energy policy to support renewable energy growth and attract capital investment through the larger capital market pools available for energy in the U.S." From a CFO's perspective, she says, she feels that such a policy must provide investors with "a predictable minimum economic return stream to attract long-term capital."
The bulk of Nickey's job at Acciona Energy North America is taken up with project finance issues — something she knows a good deal about, having worked for 20 years in commercial and investment banking experience, including 15 years in the renewable energy sector. In fact, she made the transition to CFO three years ago, working as an investment banker for Mesirow Financial on Nevada Solar One, a project that Acciona had become involved in that employs concentrated solar energy. She proceeded to start up the finance operations of the European company's new Chicago-based North American unit from scratch.
Nowadays, she spends the bulk of her time wrapping up financing on such deals as the Red Hills Wind Farm in Oklahoma, a project Acciona closed with $100 million in "tax-equity" financing and $65 million in debt financing on August 21. But as the finance chief for not only Acciona Energy North America, but for the conglomerate's separate U.S. wind and solar power subsidiaries as well, she's responsible for the usual run of a CFO's duties: accounting, financial planning and analysis, asset management, compliance, and risk management.
Indeed, making use of what seems like a wellspring of energy, she hasn't taken very many vacation days in the last three years, Nickey told CFO Deputy Editor David M. Katz and Senior Editor Marie Leone in an interview in New York on October 13. An edited version of the conversation follows.
How is Acciona North America positioned in terms of the parent corporation?
The strategy is for 70% of the growth to be international, with the North American market being the primary growth market. Given the size of the North American market for renewable energy today — in which about 2% of our power is in renewables — we have a huge opportunity to be a good chunk of that 70%.
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