Renewable Energy Projects Tax Structuring and Strategies
Updated to Reflect Changes Effected by Recent Legislation and IRS Rulings
June 17-18, 2020 | Chicago, IL
Remote attendance via video conference is now available!
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 parties involved in the acquisition and disposition of renewable energy assets 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, therefore, is designed to give investors, developers, lenders, asset owners, utilities 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 the Trump administration and current Congress
- 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 1.5 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.
Wednesday, June 17, 2020
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. :: Solar “Flip” Financial Model Review
12:00 – 1:00 p.m. :: Group Luncheon
1:00 – 2:30 p.m. :: Tax Elements and Characteristics
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
- Economic substance
- Partner in a partnership
- Cash profits
- Sacs case
- Rev Prov 2014-12 / HBH
- Overview of capital accounts
- Inside vs. outside basis
- Basis vs. 704b capital accounts
- Debt allocations
- Minimum gain
- 731/734 issues that can arise when partners receive distributions in excess of basis
2:30 – 2:45 p.m. :: Afternoon Break
2:45 – 3:30 p.m. :: Tax Elements(cont’d)
3:30 – 4:15 p.m. :: Wind Financial Model Review
4:15 – 5:00 p.m. :: Project Financing SME Panel/Open Forum
- Discussing Day 1 Items
- Recently enacted and pending legislative measures relating to renewables
- Current “thinking” in Washington
5:00 p.m. :: Program Adjourns for Day
Thursday, June 18, 2020
7:30 – 8:00 a.m. :: Continental Breakfast
8:00 – 8:45 a.m. :: Interparty Agreements: Lender – Investor Engagement
8:45 – 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 – 10:45 a.m. :: Complex Tax Issues (Continued)
- 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
10:45 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 – 4:00 p.m. :: Advanced Tax Structuring 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
4:00 – 4:45 p.m. :: Project Financing SME Panel/Open Forum
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
Shariff Barakat, Project Finance Attorney, Nixon Peabody LLP
Shariff Barakat is a project finance attorney at Nixon Peabody focused on domestic infrastructure and renewable energy projects. He represents developers, sponsors, tax-equity investors, lenders and other stakeholders in the acquisition, development and financing of power generation projects. Mr. Barakat’s focus is representing clients involved in the acquisition, development and financing of renewable energy power generation projects, with a particular focus on tax equity financing. He handles due diligence review, drafting and negotiating primary transaction documents and providing tax advice and opinions, as well as overall project management. Prior to joining Nixon Peabody, he worked at a Big Four consulting firm where he provided tax advice and opinions, financial modeling services and valuation services in connection with renewable energy projects. Mr. Barakat also provided tax advice and opinions on a number of large M&A and tax-advantaged leasing transactions.
Tom Boman, Partner, Novogradac & Company LLP
Tom Boman is a partner in the St. Louis office of Novogradac & Company LLP. He joined the St. Louis office in 2013 as a tax partner. Before joining the firm, he served as a senior vice president of tax for a private equity firm in St. Louis. Mr. Boman has more than 30 years of experience as a tax consultant to a variety of companies with a focus on pass-through entities. He has significant experience with the new markets tax credit (NMTC) at both the federal and state levels. He also worked for 17 years in public accounting, primarily with the Big Four firms. Mr. Boman participates in the Partnership and LLC Committee of the American Bar Association and is a member of the American Bar Association, the American Institute of Certified Public Accountants and the Missouri Society of Certified Public Accountants. He has Juris Doctor and Master of Business Taxation degrees from the University of Minnesota. Mr. Boman served as an adjunct instructor at the law school at Washington University in St. Louis, where he taught federal partnership taxation for 16 years.
James F. Duffy, Partner, Nixon Peabody LLP
James F. Duffy is a partner in the Boston office of the national law firm, Nixon Peabody LLP. He serves as the Co-Chair of the firm’s Renewable Energy Tax Credit Team and concentrates his practice on structuring and closing transactions involving federal income tax credits and other significant federal and state income tax incentives, including Production Tax Credits and Investment Tax Credits for renewable energy. His practice also covers New Markets Tax Credits. Mr. Duffy has represented numerous developers, investors, syndicators and lenders in structuring and closing renewable energy and other transactions. He serves on the Board of Directors and is the Secretary of the Distributed Wind Energy Association (DWEA), as well as the Board of Directors of Windustry. He is a graduate of the University of Rhode Island, B.A. and The Harvard Law School.
Tony Grappone, Partner, Novogradac & Company LLP
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.
Springhill Suites Chicago/O’Hare
8101 W Higgins Rd
Chicago, IL 60631
Reserve your room:
please call 1-773-653-2030
Room Block Reserved For:
Nights of June 14 – 17, 2019
Room rate through EUCI:
$129.00 single or double plus applicable taxes
Make your reservations prior to May 14, 2020.
Please Note: Confirmed speakers do not need to register and are encouraged to participate in all sessions of the event. If you are a speaker and have any questions please contact our offices at 1.303.770.8800
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Friday, May 29, 2020
Register 3 Send 4th Free!
Any organization wishing to send multiple attendees to these conferences may send 1 FREE for every 3 delegates registered. Please note that all registrations must be made at the same time to qualify.
Your registration may be transferred to a member of your organization up to 24 hours in advance of the event. Cancellations must be received on or before May 15, 2020 in order to be refunded and will be subject to a US $195.00 processing fee per registrant. No refunds will be made after this date. Cancellations received after this date will create a credit of the tuition (less processing fee) good toward any other EUCI event. This credit will be good for six months from the cancellation date. In the event of non-attendance, all registration fees will be forfeited. In case of conference cancellation, EUCIs liability is limited to refund of the event registration fee only. For more information regarding administrative policies, such as complaints and refunds, please contact our offices at 303-770-8800