Maximizing the benefits of tax incentives is vital in any renewable energy transaction, and whether a project “pencils out” generally turns on the efficient use of these incentives. How soon investors can get their desired return and exit the project, how much a project developer receives, and when, depends greatly on how the tax incentives are handled.
Indeed, the relevant rules are highly technical. This often means that investors, users, and developers — as well as less-specialized professionals — typically depend on the structuring advice of experts who often assume the “typical” business deal and then provide general guidance about deal structures, using jargon and arcane tax references. Worse, some investors, users, developers, and their advisers may “go it alone” and fail to attend to important aspects, leaving money on the table or putting their ventures at the risk of IRS challenges.
This course is designed to give investors, users, developers, and their advisers an in-depth understanding of the tax issues involved in the development and structure of renewable energy projects. The discussion will first focus on the various incentives available for renewables, then move to an in-depth discussion of the basic and more advanced tax and accounting rules for partnerships and leasing structures. It will incorporate case studies of actual deal structures, using economic models designed specifically for renewable energy projects. Finally, there will be a discussion as to how the tax incentives for renewables investments have been influenced by the Trump administration and updated to reflect changes effected by both the budget act and tax act of 2018. Throughout, the content will embed definitions, references to the terms employed, and transaction-specific examples. The program will culminate with a roundtable discussion of experienced renewable developers, lenders and investors.
The course content will:
- Review the existing incentives for renewable energy and discuss how the tax incentives for renewables investment has been influenced by Trump administration policies
- Discuss in depth the various rules for partnerships and leasing structures
- Explain how to optimize the financial accounting aspects of renewables
- Describe the use of new markets tax credits
- Review case studies using economic modeling analysis
- Discuss with experienced developers, lenders and investors the issues they confront in their projects
- Examine how to present financial documents to achieve the greatest “bankability”
EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET). In obtaining this accreditation, EUCI has demonstrated that it complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.
EUCI is authorized by IACET to offer 1.4 CEUs for this event.
PowerPoint presentations and case studies will be used in program.
Requirements For Successful Completion Of Program
Participants must sign in/out each day and be in attendance for a minimum of four hours to be eligible for any continuing education credit.
Monday, May 21, 2018
7:30 – 8:00 a.m. :: Registration and Continental Breakfast
8:00 – 10:00 a.m. :: Overview of Tax Incentives for Renewable Energy
- Refresher on the basics – credits, grants, and depreciation
- The Production Tax Credit (PTC) – Section 45 / sales of electricity to third parties
- The Investment Tax Credit (ITC) – Section 48 / based on cost of the facility
- Recent extension of PTC and ITC, with relevant changes
- MACRS and bonus depreciation
10:00 – 10:15 a.m. :: Morning Break
10:15 a.m. – 12:00 p.m. :: Wind Financial Models Review
- Detailed review of a typical PTC financial model
- Detailed review of a typical ITC financial model
12:00 – 1:00 p.m. :: Group Luncheon
1:00 – 2:45 p.m. :: Tax Basics
Partnerships and LLCs
- Why are partnerships and LLCs used for renewable projects?
- Basic partnership/LLC tax issues
- Comparing allocations with distributions
- Can you “sell” tax benefits?
- Development fees and other items that go into basis
- What you need to know about capital accounts
- Cash investors
- Lease vs. loan vs. service contract
- Determining ownership for tax purposes
- Section 7701
- Equipment leasing safe harbors – the IRS
- More complex partnership issues
- Treasury’s rules about “substantial economic effect”
- Historic Boardwalk Hall and Rev. Proc. 2014-12
- Economic substance and profit motive
2:45 – 3:00 p.m. :: Afternoon Break
3:00 – 4:15 p.m. :: Tax Basics (cont’d)
- Solar Flip Model
4:15 – 5:00 p.m. :: Developer and Financing Participant Panel
- Discussing Day 1 Items
- Future of tax incentives for renewables and the current thinking in Washington
5:00 p.m. :: Program Adjourns for Day
Tuesday, May 22, 2018
7:30 – 8:00 a.m. :: Continental Breakfast
8:00 – 9:15 a.m. :: Transaction Structures
- Basic concepts
- What is a “lease”?
- More specialized leasing arrangements
- Lease pass-through (“inverted lease”) structure
9:15 – 10:00 a.m. :: Complex Tax Issues
- Tax-exempt participants
- Pre-payment of electricity
- “Flip” structures
- Exit strategies
- Recapture of tax credits and grants
- Purchase options
- Puts and calls
- Limits on an investor’s ability to deduct losses
- Computing basis
- The role of non-recourse debt and minimum gain (Section 752)
- General debt vs. equity considerations
- Allocations of depreciation and net losses
- Economic substance and profit motive
10:00 – 10:15 a.m. :: Morning Break
10:15 – 11:00 a.m. :: Complex Tax Issues (cont’d)
- Specialized tax issues for renewables
- Allocations of tax credits and non-taxable Section 1603 grant proceeds
- Modeling issues
- Pre-payment for energy
- IRS safe harbor for “flip” structure transactions
- Commencement of construction for PTC purposes
- Section 50(d) income/loss allowance
- Differences between credits and grants when using leases
- Accounting issues
- Leasing to tax-exempt and governmental entities
- “Tax-exempt use”
- “Disqualified leases”
- Individual Investors
- At-risk rules
- Depreciation rules
- Tax credit rules
- Lease pass-through rules
- Passive loss rules
- Securities disclosure of tax items for individual investors
- Section 704(b) Tax Allocations
11:00 a.m. – 12:00 p.m. :: Detailed Review of Typical Lease Pass-Through Financial Model
12:00 – 1:00 p.m. :: Group Luncheon
1:00 – 2:00 p.m. :: GAAP, HLBV, Consolidation & Accounting for Tax Credits
- Accounting for Renewable Energy Investments (GAAP)
2:00 – 2:15 p.m. :: New Markets Tax Credits
- Basic structures
- Leveraged loan model
- Use with lease pass-through structure
- Combining with PTCs, ITCs, and other incentives
2:15 – 3:15 p.m. :: Advanced Tax Considerations
- Commencement of construction
- Tax ramifications of power purchase agreements (PPAs)
- IRC Section 467
- Options to buy
- Sharing of REC and SREC Revenues
- Sharing benefits with a project host
- 80% of useful life Issues and appraisals
- Selling permitted development rights or early stage projects
- What about Yieldcos and other alternative mechanisms?
- 731 gains
- Step ups
- Year 6 tax issues
3:15 – 4:45 p.m. :: Developer and Industry Participant Roundtable Discussion
The roundtable-format panel will focus on the practical problems confronted by developers and other industry participants in maximizing the efficiency of monetizing tax incentives in structuring and financing renewable energy projects. It will also discuss aspects of how to assemble a team of deal experts.
4:45 p.m. :: Program Adjourns
James F. Duffy is a partner at Nixon Peabody LLP. His practice concentrates on structuring and closing transactions involving federal income tax credits and other significant federal and state income tax incentives, including production tax credits for wind and other forms of renewable energy, energy investment tax credits for solar and certain other forms of renewable energy, Treasury cash grants in lieu of energy investment tax credits, new markets tax credits, historic rehabilitation tax credits, and low-income housing tax credits. He has represented numerous developers, investors, syndicators, and lenders in structuring and closing such transactions. Mr. Duffy has represented parties in many high-profile renewable energy transactions, including representing the lead tax equity investor in the Nellis Air Force Base solar installation, at the time the largest solar PV installation in the United States.
Richard Cogen is a partner at Nixon Peabody LLP, and past Chair of the firm’s Energy and Environment Practice Group. Over his 30-year career, he has worked extensively on the development of major energy, renewable energy, and electric transmission facilities. His practice currently focuses on the development of wind, solar, biomass and fossil fuel-fired generating facilities, and independent transmission projects. Mr. Cogen has represented developers, buyers, and sellers of, and investors in, utility and commercial scale solar energy generating facilities. He earned a J.D. from Cornell Law School, and a B.A. from the University of Rochester.
Courtney Ferguson is an associate in Nixon Peabody’s Tax Credit Finance & Syndication group. She focuses on helping corporate investors and syndicators use various tax incentives, including low-income housing tax credits, to finance affordable housing and community development nationwide. Additionally, Ms. Ferguson represents developers and equity investors in transactions involving renewable energy tax credits.
Tony Grappone is a partner in the Boston, Mass., office of Novogradac & Company LLP, where he specializes in providing accounting, tax, and consulting services to developers, syndicators, and investors of projects that qualify for the low-income housing tax credit, historic tax credit, new markets tax credit, and renewable energy tax credit. He serves as a technical editor of the firm’s Renewable Energy Tax Credit Handbook. Prior to joining Novogradac & Company LLP, Mr. Grappone worked at Ernst & Young LLP, specializing in partnership taxation within the affordable housing industry, servicing many of the nation’s largest tax credit syndicators and investors. In addition, he served several leading venture capital firms as well as commercial real estate developers and investors. Mr. Grappone serves as a member on the Northeastern University Undergraduate Accounting Group Advisory Board. He received a bachelor’s degree from Northeastern University in Boston, Mass., and is licensed in Massachusetts and New Hampshire as a certified public accountant.
Forrest David Milder is a partner in the Boston office of Nixon Peabody LLP. He has more than 30 years’ experience in the tax aspects of project finance, particularly renewable energy (including solar, wind, geothermal, and biofuels), housing, historic rehabilitations, and new markets, as well as many other related fields, including partnerships and limited liability companies; tax-exempt organizations and unrelated business income; business formation, operation, and disposition; executive compensation; and tax-exempt bonds and other structured financial products.
Martin Mobley is CEO of United States Solar Corp (US Solar), a solar development and finance company with a particular focus on off-site and community solar solutions. He started U.S. Solarafter forming and leading the Solar Desk at Morgan Stanley Commodities, where he led the group into the US commercial market (~100 rooftop, ground mount and parking canopy projects), the US residential market (three separate US residential financing programs) and the Ontario market (75+ rooftop projects). Prior to Morgan Stanley, Mr. Mobley was an attorney at McDermott, Will & Emery in Washington, D.C. He has an LL.M. from Georgetown University Law Center, a JD/MBA from Northern Illinois University, and a BSBA from The University of Arizona.
Hyatt Regency Indianapolis
One South Capitol Avenue
Indianapolis, IN 46204
To reserve your room, please call 1-317-632-1234 or book online here.
Please indicate that you are with the EUCI group to receive the group rate.
The room rate is $179.00 single or double plus applicable taxes.
Room Block Dates:
A room block has been reserved for the nights of May 20 – 21, 2018.
Rate Available Until:
Make your reservations prior to April 29, 2018. There are a limited number of rooms available at the conference rate. Please make your reservations early.