Structuring renewable energy projects that provide acceptable investment returns is often helped by using feed in tariffs in European and other markets, but tax equity vehicles are more common in the US. Tax equity arrangements can be structurally complicated and difficult to administer, but can also provide double-digit returns when done properly.

These were some of the issues discussed by an expert panel at the AGRION Energy Summit and Sustainability Meeting held this week in New York City. The production tax credit for wind projects – recently extended for one year after much controversy – and the investment tax credit for solar are two tax equity vehicles commonly used in the US to help finance projects.

Regulatory uncertainly has been a major complaint among renewable energy project developers and investors, who find it difficult to commit millions of dollars when there is a risk that policies will change during a project’s lifetime and jeopardize ROI. This remains a concern and limits the universe of active tax equity investors.

“There are about 15 to 20 active tax equity investors right now,” said Albert Luu, Vice President of Structured Finance at SolarCity. But there are fewer in reality because they each have very strict investment criteria, Luu said.

Finding an appropriate partner is the first step, said Matt Haskins, Partner at PricewaterhouseCoopers: but who are these partners if not banks?

While banks still play a large role, large developers are increasingly working with third party investors as well, said Jonathan Plowe, Managing Director of New Energy and Infrastructure Solutions at Bank of America. Educating treasuries and other non-traditional investors about tax equity arrangements is one of the challenges.

These investors often do not want to be tied to a project for the entire 15 to 20 year life of a power purchase agreement and structuring deals so these parties can exit after 5 or 6 years is perhaps more desirable said Luu.

Tax code reform is another considerable barrier to expanding the tax equity investor community. Insurance companies and high net worth investors cannot come in as tax equity investors due to the current tax code and they only play on the debt side right now, said Haskins.

Master Limited Partnerships, which have become popular in the oil and gas markets, would also require broader US tax code reform in order for them to play a similar role in the renewable energy space. “The advantage of an MLP is that it combines the tax benefits of a limited partnership (the partnership does not pay taxes from the profit – the money is only taxed when unitholders receive distributions) with the liquidity of a publicly traded company,” according to Investopedia.

“Tax equity is complicated, but the returns [10% – 14%] are unmatched,” Luu said.


  • Andrew John Pelley

    We specialize in lease and sales of Bank Guarantee {BG}, Standby Letter of Credit {SBLC}, Medium Term Notes {MTN} and Confirmable Bank Draft {CBD}, this financial instrument is issue from AAA Rated bank such as HSBC Bank, UBS Zurich, Barclays Bank , Standard Chartered Bank E.T.C.

    The financial instrument can be invested into High Yield Investment Trading Program {HYITP) or Private Placement Program (PPP). We are direct to a genuine and reliable Financial Organization, without broker chain or chauffer driven offer.

    Kindly get in touch for further details and procedure.


    Mr.Andrew John Pelley


  • providermandate

    I have a provider who is ready, willing and able of delivering banking instruments (BG/SBLC) for lease which can be used in all forms of projects. Our bank instrument can be used as collateral to seek for loans from different banks of choice and can be used to engage into ppp trading.

    For contacting purpose:

    Contact : Mr. Sorin Lassmann
    Skype ID: ls.nicu

  • Jacob

    We are specialist in providing direct and geniune provider of BG, SBLC, MTN, CD,LC , Non collateral loan, confirmable Bank Draft and other financial assistance from AAA rated bank (Prime Bank). The financial instrument can be invested in High Yield Trading Program or Private Placement Programme (PPP). thus our Bank Guarantee lease , the Direct Bank Guarantee and Indirect Bank Guarantee, which is used as Bid Bond, Payment Guarantees, Letter of Indemnity,Guarantee Securing Credit Line, Advance Payment Guarantees, Performance Bond Guarantee E.T.C.
    We deliver promptly as set forth by our agreement. we have direct contact with the principal, mandate and brokers.
    we ensure unequaled service and will be glad to share our working procedures with you upon request to help us proceed towards closing deals effectively

    For further inquiry contact
    Skype ID: bgjan.farnholt