New Tax Bill is already Hurting Renewables
How Trump's Tax Plan Made It Harder to Finance Renewables
By Brian Eckhouse and Chris Martin
January 12, 2018, 9:45 AM EST
At least $3 billion of tax-equity investments on hold
PosiGen ‘just lost $100 million in tax equity last week’
PosiGen Inc. was close to finalizing terms on a $100 million financing deal. Then Congress passed President Donald Trump’s tax-reform plan.
“We just lost $100 million in tax equity last week,” Thomas Neyhart, chief executive officer of the Louisiana rooftop solar installer, said in an interview. “Of course, they let us go because we’re relatively small.” He declined to identify the prospective U.S. investor.
PosiGen is one of many companies that are suddenly facing a new financing reality because of the tax overhaul, especially clean-energy developers seeking tax-equity deals. At least $3 billion in potential deals are on hold for this type of financing, according to John Marciano, a Washington-based partner at law firm Akin Gump Strauss Hauer & Feld LLP. Some investors have exited or are sidelined, while others are considering repricing their transactions.
Tax equity is a critical but esoteric source of renewables financing -- totaling about $12.2 billion in 2016, according to Bloomberg New Energy Finance. There were about 35 tax-equity investors last year, according to JPMorgan Chase & Co. While solar and wind projects are typically eligible for federal tax credits, many don’t owe enough to the government to take full advantage. Instead, they turn to banks, insurance companies and some big technology firms that monetize the credits through tax-equity investments.
Tax Equity Investment At Risk?
Trump's tax plan may reduce the supply of a critical source of clean-energy financing
Source: Bloomberg New Energy Finance
Because the law reduced the corporate rate from 35 percent to 21 percent, companies will have fewer liabilities and therefore less need to find ways to reduce their bills. Further, there are provisions in the law that may constrain some multinational companies’ ability to do deals.
“This adds a layer of complication,” said Jeff Waller, a New York-based principal of sustainable finance at the Rocky Mountain Institute, in an interview. “It may be a step too far for some.”
The result: a market that’s poised to “tighten,” said John Eber, a Chicago-based managing director at JPMorgan, on a webinar Thursday hosted by law firm Norton Rose Fulbright LLP. Tax-equity investors that remain in the renewables market might “moderate” their contributions, he said.
With less tax-equity investments, smaller companies like PosiGen may lose out to more established developers. For PosiGen, it means turning to a different class of investors.
“We can’t get past banks’ credit committees anymore,” Neyhart said. “We’re talking to more family offices.”
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Comment
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Comment by Long Islander on January 13, 2018 at 5:55pm
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As someone said, these are misnamed wind turbines -- their real name should be subsidy meters.
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Comment by arthur qwenk on January 12, 2018 at 7:05pm
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It is well past the time to tack these shysters to the wall!
Let's indeed hope it gets very tight for these subsidy seeking low value wind projects .
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Comment by Eskutassis on January 12, 2018 at 6:34pm
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I'm dancing a jig! . . . . . .
Maine as Third World Country:
CMP Transmission Rate Skyrockets 19.6% Due to Wind Power
Click here to read how the Maine ratepayer has been sold down the river by the Angus King cabal.
Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT
******** IF LINKS BELOW DON'T WORK, GOOGLE THEM*********
(excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010 https://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?" https://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” https://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/
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Hannah Pingree on the Maine expedited wind law
Hannah Pingree - Director of Maine's Office of Innovation and the Future
"Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine."
https://pinetreewatch.org/wind-power-bandwagon-hits-bumps-in-the-road-3/
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