On July 17, 2019, the US Internal Revenue Service (IRS) issued final regulations (T.D. 9872) providing guidance on the rules under Internal Revenue Code (IRC) section 50(d)(5) that require an income inclusion by the lessee in the so-called “pass-through lease” structure used with investment tax credit property. The final regulations adopt, without change, the proposed

Here’s a presentation that Joseph Sebik, CPA of Siemens Financial Services and I gave to the Energy Subcommittee of the Equipment Leasing and Finance Association on January 22: Tax Equity Energy Subcommittee 1-22-19 of ELFA.

Despite being to a leasing trade association, the focus of the presentation is the partnership flip structure.  The presentation

I am pleased to announce that I will be speaking in an upcoming Strafford live webinar, “Tax Reform and Renewable Energy: Planning Techniques, 100% Expensing, BEAT, Tax Credits and Interest Deduction Limitations” scheduled for Wednesday, January 16, 1:00 pm-2:30 pm Eastern.

As a reader of this blog, you are eligible to attend this

Below are soundbites from panel discussions at Solar Power International on September 25 and 26 in Anaheim, California. Overall the conference was well-attended and the panelists and audience seemed optimistic regarding current and future opportunities.

The soundbites are organized by topic, rather than presented chronologically.  The soundbites were prepared without the benefit of a recording or a transcript and have been edited for clarity.

Topics covered include tax equity, the solar start of construction rules, the investment tax credit (“ITC”) and tax basis risk after the Federal Circuit’s opinion in Alta Wind, the inverted lease structure, back-leverage debt, storage, community solar and merchant projects.

Macroeconomic Factors for Solar and Tax Equity

“Rising corporate profits have caused more tax equity to enter the market.  That has shifted the negotiating leverage to the sponsors.”  Managing Director, Money Center Bank

“Tax equity always needs to fund around 40 percent of the capital stack in order to use the tax benefits efficiently.”  Managing Director, Money Center Bank “Equipment costs continue to come down.  Module prices are back to where they were before the tariffs at 30 to 40 cents a Watt.”  President, Diversified Solar Services Company

“There are greater economies of scale for utility scale solar than for residential or C&I.  As module prices drop faster than that customer acquisition costs, utility scale will become a larger portion of the market.”  President, Diversified Solar Services Company

“I am very bullish on next year.  This has been the best year ever from a volume perspective, not from an income perspective, because the market is causing us to charge less.”  Managing Director, Regional Bank

“Falling electricity prices aren’t leading to sponsors raising less capital, because sponsors have been beating down lenders and service providers.”  Managing Director, Regional Bank

“Capital providers are taking more risk for less return.”  Managing Director, Regional Bank

“Residential solar debt has become an accepted asset class.” Managing Director, Regional Bank

“Soft costs, such as marketing, legal, accounting and tax advice, are five to seven percent of a solar project’s cost in Europe and Asia; they are 35 percent of solar project’s cost here; we need to attack that.”  President, Solar Developer
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In September, the State of Hawaii Department of Taxation issued a letter ruling (Hawaii Letter Ruling No. 2018-01) that clarified the “placed in service” requirement in the application of the Renewable Energy Technologies Income Tax Credit (“RETITC”) in Hawaii.  A project was denied RETITC in the year when testing was conducted because the project had

Below are answers to questions we received during our tax equity webinar of October 23.  These questions were submitted online during the webinar.  The presentation from the webinar is available here.

Question: Commercial and industrial (C&I) has higher returns but how many projects raise tax equity versus other segments of the solar market? What

We were pleased to participate in Power Finance & Risk’s (PFR) Tax Equity Roundtable.  We were joined in the roundtable discussion by Rich Dovere of C2 Energy Capital, Marshal Salant of Citi, Kathyrn Rasmussen of Capital Dynamics Clean Energy and Infrastructure, Pedro Almeida of EDP Renewables North America and as moderator PFR’s editor, Richard Metcalf. 

Mayer Brown’s David K. Burton and Jeffrey G. Davis both Tax Transactions & Consulting partners and part of the firm’s Renewable Energy group co-hosted a heavily attended webinar on how tax reform is impacting the tax equity market and certain renewable energy structures with Vadim Ovchinnikov, CFA, CPA and Gintaras Sadauskas of Alfa Energy Advisors.

I was a panelist at an event held at Mayer Brown’s New York office addressing Environmental, Social and Governance (“ESG”) investing on October 4.  On the panel, I addressed the tax benefits associated with certain ESG investments, with a focus on Qualified Opportunity Zone Funds and solar investment tax credits (ITC).  Here are the slides