Below are soundbites from panelists from the Renewable Energy Finance Forum (“REFF”) Wall Street on June 19 and 20. The mood was upbeat. There were many references to a “wall of cash chasing projects” as a metaphor for how competitive it is to win bids to finance or purchase projects.
The soundbites are edited for clarity and are organized by topic, rather than in chronological order. They were prepared without the benefit of a transcript or recording.
The topics covered include the tax equity, debt and M&A markets, C&I solar, offshore wind, bonus depreciation, storage, YieldCos and others.
Tax Equity Market
“Solar tax equity is 30 to 38 percent of the capital stack of a project. Wind tax equity is 47 to 62 percent of the capital stack of a project.” – Managing Director, Boutique Investment Bank
“We are seeing a lot more wind. We are using our tax equity capacity in wind in 2018. Solar is looking good for 2019 and beyond.” Managing Director, Trust Company
“This year we will invest more in wind than in solar.” – Managing Director, Money Center Bank
“We are seeing tax equity portfolios that are seasoned trade in a secondary market. [Generally These are tax equity portfolios] that haven’t flipped on time or that [have the benefit of material cash distributions] but not tax” credits. – Managing Director, American Multinational Financial Services Company
“There is more tax equity now than there was before tax reform.” Managing Director, REIT
“2018 is a slow down due to tax reform and tariffs.” Managing Director, National Bank
“There is a lot less tax equity capacity due to the lower tax rate.” – Managing Director, American Multi-National Investment Bank
[Explained: there may be more tax equity investors in the market than last year; however, last year the corporate tax rate was 35 percent, and this year it is 21 percent, so a typical tax equity investor has 40 percent less tax appetite (and ability to invest in tax equity) in 2018 than it did in 2017.]
“If you are in BEAT [(i.e., the base erosion anti-avoidance tax in enacted as part of 2018 tax reform)], you cannot compete in tax equity. A couple of investors were hit with BEAT and exited.” – Managing Director, American Multi-National Investment Bank
“We get ten requests for tax equity a week and say ‘yes’ to less than one a week. We have to prioritize opportunities.” – Managing Director, American Multi-National Investment Bank