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On December 31, 2020, the IRS released Notice 2021-05 (the “Notice”) on its website, in advance of its official publication. As discussed in our earlier blog post, the Notice provides favorable guidance for offshore renewable energy projects (“Offshore Projects”) and renewable projects constructed on federal land (“Federal Land Projects”) and generally allows these…

On December 31, 2020, the US Treasury Department and the Internal Revenue Service (the “IRS”) issued Notice 2021-05 (the “Notice”), which provides relief for offshore renewable energy projects and renewable projects constructed on federal land. Specifically, the Notice allows the Continuity Safe Harbor to be satisfied for projects constructed offshore or on federal land if…

On Monday, December 21, 2020, the United States Congress passed a second large stimulus bill[1] (the “Relief Bill”) aimed at curtailing the economic disruptions caused by COVID-19. The Relief Bill, among other things, extends renewable energy tax credits for wind projects, solar projects and carbon capture and sequestration and contains specific provisions addressing offshore wind farms. These extensions include a one-year extension for wind projects, a two-year extension for solar projects and a two-year extension for carbon capture and sequestration projects. President Trump is expected to sign the Relief Bill and has until December 28, 2020 to do so, when the current stopgap funding measure expires.…
Continue Reading Solar and Wind Tax Credits Extended, Again

Off shore wind turbines (Digital Composite)

Last night, Congressional leaders announced an agreement on a $900 billion COVID relief bill. While the text of the bill has not been released as of this writing, people familiar with the negotiations have indicated that the deal will extend renewable energy tax credits for wind and solar projects and the Section 45Q carbon capture…

On May 27, 2020, the US Internal Revenue Service (the “IRS”) released Notice 2020-41 (the “Notice”), updating the IRS guidance on the start-of-construction rules for the production tax credit (“PTC”) and energy investment tax credit (“ITC”) by extending the continuity safe harbor for projects that began construction in either calendar year 2016 or 2017.1 Additionally, the Notice provides relief under the so-called 3 ½ month rule where payments were made on or after September 16, 2019, but the services or property were not expected to be provided until 2020, as long as they are actually received by October 15, 2020.
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Continue Reading IRS Provides Start-of-Construction Relief for Renewables in Light of COVID-19

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.…

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…
Continue Reading Renewable Energy Finance Forum Wall Street Soundbites: the Tax Equity, Debt and M&A Markets, etc.

A Word About Wind has published my article about offshore wind in the United States as part of its Legal Power List 2018 special report.  The article discusses how offshore wind projects, such as Vineyard Wind, have certain advantages over onshore wind, particularly with respect to tax credits for storage.  Here is a link to…