About Solar power plant equity transfer
There are three main solar tax equity structures with two significant variations. The three are partnership flips, inverted leases and sale-leasebacks.
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About Solar power plant equity transfer video introduction
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6 FAQs about [Solar power plant equity transfer]
Will a transfer of ownership affect a solar project?
The current assumption is that the transfer payment owner will likely be entirely disconnected from the solar facility, and would not be affected by a project transfer of ownership. In the tax equity world, the buyer of a tax credit is part of the project, so they would have to remain an owner for five or more years.
Can a tax equity partnership buy a solar project?
In one of the cases, a utility signed a build-transfer agreement with a solar company to buy a solar project near the end of construction. Rather than buy the project directly, it assigned the build-transfer agreement to a tax equity partnership.
Are utilities financing solar projects in the tax equity market?
Utilities are financing solar projects in the tax equity market in a manner that produces enhanced benefits. The Internal Revenue Service described two such transactions in a pair of private letter rulings that the agency made public in late July and early August.
How much tax equity should a transfer payment project have?
Factors like depreciation, as well as the price paid for tax credits versus expected transfer payments, and basis step up opportunities, can get tax equity to within 40-60 basis points of the weighted average cost of cash for a transfer payment project.
Are transfer payments tax equity?
An article released by Segue Sustainable Infrastructure, a principal investment firm providing development capital to renewable energy projects, compares this new tool – transfer payments – to tax equity in a technical financial writing.
Who owns a solar plant?
With few exceptions, the seller is a special purpose entity (often called an “SPV” or the “project company”) that owns and operates the solar plant that will generate energy and environmental attributes (“output”).