Eligible construction-ready projects may apply to TIP to borrow capital to construct statutorily-eligible new or upgrade existing grid infrastructure at any time. Given the diversity and complexity of eligible projects, applicants are strongly encouraged to consult with a Transmission Infrastructure Program (TIP) Senior Investment Officer to discuss expectations, process, and timing specific to the project.
LOAN PROGRAM: TIP is not a loan guarantee or grant program, and only provides secured (direct) loans
TYPICAL LOAN TENOR: Preference is for shorter-term loans, primarily through construction and up to 10 years
INTEREST RATES: Interest rates set based on equivalent U.S. Treasury rate (plus a credit-based spread if applicable)
EQUITY: Most projects are expected to follow customary industry equity requirements
CO-LENDING: For large projects, co-lending with commercial lenders is contemplated but not required
REPRESENTATIVE LOAN PRODUCTS
Construction: For major execution and build out of transmission lines, substation and related facilities for a major project. If warranted, could include pre-construction activities including long-lead items and other customary advanced stage development activities prior to execution of construction.
Term: May be offered for select projects that link to WAPA and preference power customer benefits or projects.
Though terms and conditions vary by transaction, the basic parameters are as follows:
TENOR: The loan tenor is usually linked to loan product and range and typically range from 2 to 4 years for preconstruction and construction. Term loans are reviewed on a transaction-specific case.
LOAN SIZE: Typical TIP loan financings can range from $40 million to $1 billion. TIP may work with co-lenders on larger projects. WAPA TIP strongly prefers to exit transaction at commercial operations in favor of capital market and institutional investor participation.
TYPICAL PROGRAM PARTICIPATION COSTS: Project applicants must submit funds to WAPA TIP to cover all costs related to the intake, reviews, underwriting activities, and other program underwriting costs, which may include affiliated agency activities and outside advisors.
- Costs can range between $400,000 and $750,000 plus borrower payment for lender directed consultants.
- Costs vary significantly depending on the complexity of the project.
- Borrowers must bear costs of required annual loan servicing and monitoring.
- Commitment Fees are determined for each transaction.
- Interest rates are based upon applicable United States Treasury rates, plus a credit risk premium determined during underwriting credit assessment(s).
- An annual loan administration cost can average $350,000 per year.
APPLY: Loan package documentation for project financing may originate for projects which have received TIP development assistance or project applicants can apply directly. TIP requires loan documentation which in general consists of a business plan plus supporting documentation; a financial model; and transaction specific documentation for underwriting and customary due diligence requirements. For more detailed instructions on loan documentation requirements, sponsors are strongly encouraged to contact the TIP Senior Investment Officer.
PROCESS: TIP processes transactions as quickly as an applicant and TIP, working together, are able to complete the necessary procedures and documentation for loan approvals. The duration of the origination, underwriting, credit review and approval process varies depending on a number of factors, including how quickly relevant project information and documentation are provided to TIP, the complexity of the transaction, the status and/or completion of the required permitting, the length of the negotiations for agreements, the nature of the security documentation, and the responsiveness of legal counsel.
For questions or concerns about the application process, contact TIP via email or by calling 720-962-7710.