Financing Solar Energy How to Finance Your Deal May 21, 2009
description
Transcript of Financing Solar Energy How to Finance Your Deal May 21, 2009
![Page 1: Financing Solar Energy How to Finance Your Deal May 21, 2009](https://reader034.fdocuments.net/reader034/viewer/2022051421/56816039550346895dcf5ac6/html5/thumbnails/1.jpg)
Financing Solar EnergyHow to Finance Your DealHow to Finance Your Deal
May 21, 2009
Bruce M. SerchukNixon Peabody LLP
401 9th Street NW, Suite 900Washington, DC 20004
(202) [email protected]
![Page 2: Financing Solar Energy How to Finance Your Deal May 21, 2009](https://reader034.fdocuments.net/reader034/viewer/2022051421/56816039550346895dcf5ac6/html5/thumbnails/2.jpg)
Financing Options
• Clean Renewable Energy Bonds
• New Clean Renewable Energy Bonds
• Qualified Energy Conservation Bonds
• Tax-Exempt Governmental Bonds
• ARRA Options (BABs, Recovery Zone Bonds)
• Bonds and New Markets Tax Credits
![Page 3: Financing Solar Energy How to Finance Your Deal May 21, 2009](https://reader034.fdocuments.net/reader034/viewer/2022051421/56816039550346895dcf5ac6/html5/thumbnails/3.jpg)
Clean Renewable Energy Bonds
• Added in 2005 (Energy Policy Act of 2005)
• Supplemented in 2006 (Tax Relief and Health Care Act of 2006)
• Designed to provide an incentive for governmental bodies (including Indian tribes) and cooperative electric companies to produce renewable energy comparable to incentives available to the private sector
• Eligible projects include generally Section 45 projects, including solar
![Page 4: Financing Solar Energy How to Finance Your Deal May 21, 2009](https://reader034.fdocuments.net/reader034/viewer/2022051421/56816039550346895dcf5ac6/html5/thumbnails/4.jpg)
Clean Renewable Energy Bonds
• CREBs are “tax credit bonds”
• Designed to provide the borrower with a 0% loan―the Federal tax credit received by bondholder intended to be comparable to interest on interest bearing loan
• No private ownership, but no private use limits
• Subject to tax-exempt bond arbitrage rules
• Treasury sets tax credit rates daily
• Treasury sets permitted maturity daily; level principal payments are required
![Page 5: Financing Solar Energy How to Finance Your Deal May 21, 2009](https://reader034.fdocuments.net/reader034/viewer/2022051421/56816039550346895dcf5ac6/html5/thumbnails/5.jpg)
Clean Renewable Energy Bonds
• $1.2 billion of CREBs has been authorized, $750 million for governmental bodies, $450 million for coops
• Eligible borrowers must apply for an allocation by providing information about the project and its financing
• CREBs are allocated to applicants beginning with the project with the smallest amount requested and then the next-smallest amount, until the total is exhausted
• Must be issued before January 1, 2010
![Page 6: Financing Solar Energy How to Finance Your Deal May 21, 2009](https://reader034.fdocuments.net/reader034/viewer/2022051421/56816039550346895dcf5ac6/html5/thumbnails/6.jpg)
New Clean Renewable Energy Bonds
• Added in 2008 (Energy Improvement and Extension Act of 2008)
• Supplemented in 2009 (American Recovery and Reinvestment Act)
• $2.4 billion total volume
• No termination date
![Page 7: Financing Solar Energy How to Finance Your Deal May 21, 2009](https://reader034.fdocuments.net/reader034/viewer/2022051421/56816039550346895dcf5ac6/html5/thumbnails/7.jpg)
New Clean Renewable Energy Bonds
• Same types of projects as CREBs
• 70% tax credit
• Same final maturity, but no principal amortization
• Modified arbitrage rules
• Stripping of tax-credits
• Allocations—1/3 to munis, 1/3 to public power, 1/3 to coops
• Allocations—muni and coops (small to large), public power (pro rata)
![Page 8: Financing Solar Energy How to Finance Your Deal May 21, 2009](https://reader034.fdocuments.net/reader034/viewer/2022051421/56816039550346895dcf5ac6/html5/thumbnails/8.jpg)
Qualified Energy Conservation Bonds
• Added in 2008 (Energy Improvement and Extension Act of 2008)
• Supplemented in 2009 (American Recovery and Reinvestment Act)
• $3.2 billion total volume
• No termination date
![Page 9: Financing Solar Energy How to Finance Your Deal May 21, 2009](https://reader034.fdocuments.net/reader034/viewer/2022051421/56816039550346895dcf5ac6/html5/thumbnails/9.jpg)
Qualified Energy Conservation Bonds
• Same basic structure as new CREBs
• 70% credit
• Laundry list of permitted projects, including solar
• Up to 30% may be used for private activities, including private ownership
• Allocations—to States and Large Local Governments (>100,000 population)
![Page 10: Financing Solar Energy How to Finance Your Deal May 21, 2009](https://reader034.fdocuments.net/reader034/viewer/2022051421/56816039550346895dcf5ac6/html5/thumbnails/10.jpg)
Tax Exempt Governmental Bonds
• Property must be governmentally owned
• Limited private use allowed
• Property may be managed under a Qualified Management Agreements
• Prepayments
![Page 11: Financing Solar Energy How to Finance Your Deal May 21, 2009](https://reader034.fdocuments.net/reader034/viewer/2022051421/56816039550346895dcf5ac6/html5/thumbnails/11.jpg)
ARRA Options
• Build America Bonds– Same general rules as tax exempt governmental bonds
– 35% tax credit to issuer or holder
• Recovery Zone Bonds– Economic Development Bonds (45% tax credit)
– Facility Bonds (private activity bonds)
![Page 12: Financing Solar Energy How to Finance Your Deal May 21, 2009](https://reader034.fdocuments.net/reader034/viewer/2022051421/56816039550346895dcf5ac6/html5/thumbnails/12.jpg)
Bonds and NMTCs
• Leveraged NMTC Structure
• Eligible Bonds
– CREBs
– New CREBs
– QECBs (private activity bonds)
– Recovery Zone Facility Bonds