DTE Electric prices $525 million in green bonds

DTE Electric is the first Michigan company is tapping the green bond market to build renewable energy and increase energy efficiency. However, this is the same utility that supported the recent dismantling of net metering and has pushed state regulators to approve a new gas plant despite regulators themselves noting a lack of consideration of other options.

The Michigan utility will be using the green bond market to finance, ‘in whole or in part, existing and new qualifying “Eligible Green Expenditures”’.

In the company’s filing with the SEC, the “Use of Proceeds” is broadly listed as “Renewable Energy and Energy Efficiency”, with the Renewable Energy portion being for either construction of new renewable infrastructure or procuring electricity from renewable energy projects through power purchase agreements.

DTE Energy is currently planning to build 1 GW of wind and solar by 2022 (almost exclusively wind) as part of its compliance with the state’s renewable energy mandate.

The utility hopes to pay 4.05% a year on the bonds over a 20 year term. At least eight banks participated in the deal, with the joint book-running mangers being Barclays, BNP Paribas, BofA Merrill Lynch and TDD Securities.

In its press release, DTE Electric noted they are the “fifth investment-grade energy company in the nation – and the first company in Michigan – to sell green bonds”.

Its to be seen if $525 million worth of positive press coverage will over power the loss of net metering and continued reliance on fossil fuels.

The Green bond investment has spiked in recent years, with the Climate Bond Initiative reporting that more than $155 billion in green bonds were issued in 2017, and projecting as much as $250-300 billion in 2018.