Global Project Finance > Tax Equity Telegraph
19 Oct '15

Akin Gump Strauss Hauer & Feld LLP partner David Burton will chair the American Wind Energy Association’s webinar on October 27 at 3 p.m. ET on YieldCos. The other panelists are Ray Wood (Managing Director – Head of U.S. Power & Renewables for Bank of America Merrill Lynch) and Julie Dumoulin-Smith (Executive Director – Equity Research, UBS Securities LLC).

YieldCos have opened up new capital markets for wind projects while creating enormous buzz around growth potential. The sector has also experienced challenges in turbulent markets; this webinar will discuss the latest news share analysis as to how YieldCos may fare in the future.

Registration for the webinar is available here.

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17 Feb '15

The Infocast Wind Power Finance & Investment Summit 2015 was held from February 10 to 12 in San Diego.  Below are selected sound bites regarding the tax equity market and other finance related matters.1

IRS PTC Eligibility Start of Construction Guidance

Multiple speakers expressed the sentiment that the market believes it is likely the IRS will extend the placed-in-service safe harbor deadline in Notice 2013-60, that allows a project owner to avoid the applicable continuous work or continuous efforts requirements of the production tax credit (PTC) eligibility rules, from the end of 2015 to the end of 2016 to reflect the one-year extension enacted by Congress at the end of 2014.

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26 Sep '14

Question: With more YieldCo’s coming to the market, how do you see these tax equity transactional structures fitting together with YieldCos (assuming the YieldCo can't monetize the tax benefits)?  Especially if YieldCo’s prefer steady cash flows. 

Answer: The market is still working the details of this out.  There are three primary tax issues in transferring an interest in a project subject to tax equity transaction to a YieldCo.  First, does the transfer trigger recapture of ITC for the tax equity investor.  In a flip partnership, if the developer’s interest is transferred to a YieldCo, that will result in recapture of the ITC for the developer only; usually the developer has only been allocated one percent of the ITC, so that recapture cost is de minimis.  Second, does the transfer result in a constructive partnership termination for depreciation purposes; this only happens if more than 50 percent of the profits and capital interest in a partnership is transferred in a rolling twelve month period.  See Code Section 708(b)(1)(B).  Further, it merely results in a re-starting of the depreciation schedule, so there is no actual loss of depreciation.  And third, can the YieldCo efficiently use any tax benefits being provided to it; generally, YieldCo’s taxable income profiles result in them being efficient users of depreciation but not tax credits.

Here’s a link to a presentation from a webinar I chaired on YieldCo’s, MLPs and REITS on Sept. 4: http://cdn.akingump.com/images/content/3/1/v2/31942/31937-4.pdf.

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25 Sep '14

Akin Gump partner, David Burton and Alfa Business Advisors partners, Vadim Ovchinnikov and Gintaras Sadauskas hosted a seminar on Tax Equity Structuring, Financial Modeling and HLBV Accounting yesterday.

The seminar covered a variety of topics, including levered/unlevered partnership and lease structuring, the recent production tax credit “start of construction” guidance from the IRS, and the financial modeling complexities.

The seminar presentation is available here.

There will be a subsequent blog post with the recording of the seminar and the answers to any questions that were submitted by the audience during the presentation.

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17 Sep '14

Akin Gump partner, David Burton and Alfa Business Advisors partners, Vadim Ovchinnikov and Gintaras Sadauskas are hosting a seminar on Tax Equity Structuring, Financial Modeling and HLBV Accounting on Tuesday, September 23, 2014. This seminar will be a live presentation in the New York office of Akin Gump and will also be available as a webinar.

The seminar will cover a variety of topics, including levered/unlevered partnership and lease structuring, the recent production tax credit “start of construction” guidance from the IRS, and the financial modeling complexities during the capital raise and operating stages of renewable energy projects.  The session will also include a discussion of hypothetical liquidation at book value (HLBV) accounting.

To view the invitation and register please click here.

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08 Aug '14

Today, the Internal Revenue Service (IRS) issued Notice 2014-46, which clarifies the rules for a wind project to be deemed to have started construction in 2013 as is necessary to be eligible for production tax credits (PTC) or the investment tax credit (ITC).  The notice is available here.

The new guidance is generally consistent with the industry’s requests for clarifications;1 however, it adds unanticipated complexity with respect to the transfer of grandfathered projects.  Also, it provides rules that the industry did not request with respect to projects that fall short of meeting the safe-harbor of spending 5 percent of their total cost in 2013.

The applicability of the guidance is not limited to wind projects. It also applies to geothermal, biomass, landfill gas and some hydroelectric and ocean energy projects. Solar projects are not subject to the guidance and qualify for a 30 percent investment tax credit, so long as they are “placed in service” by the end of 2016.

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