CREBs, or Clean Renewable Energy Bonds were created by the Federal Energy Policy Act of 2005 as a financing instrument for electric cooperatives, public power systems, and state and local municipalities to use for building renewable electricity projects. In essence, they’re the equivalent of interest-free loans in which bondholders receive a tax credit on their federal income taxes instead of getting interest payments.
CREBs made their debut in New Jersey when the Bergen County Improvement Authority (BCIA) utilized the program to finance a series of renewable energy projects. Their first CREBs-financed project was the installation of solar panels on a municipal building and a wastewater plant. The solar panels for the wastewater plant are expected to produce at least 20 percent of the energy needed to run the facility.
Taking part in the CREBs program was a rather bold move for the BCIA because it hadn’t previously been utilized in this region. It took a combination of public and private interests working together to bring it about. Notable players included the law firm of Wilentz, Goldman & Spitzer and Capital Financial Advisors.
Another way to view this unique financing program is that in a few years it won't be very unique at all. As state and local governments find it increasingly difficult to get bonds issued, it will be apparent that the CREB's incentives are yet another way to get the deal done. What's exceptional about this program is not only that it makes financing available to these municipalities, but that it is also creating new renewable energy projects as well. In this case, both private and public interests are finding new ways to work together in building a more sustainable society.
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