Advanced Energy Perspectives

FINANCE: Senate Finance Extends PTC, SunEdison Establishes Yieldco, & More

Posted by Dan Scripps

Apr 22, 2014 3:05:00 PM

    

innovative-energy-investmentAdvanced energy finance is an ever-expanding field with many players, including government agencies, private investors, and international financial institutions. Our periodic Finance updates will help you understand and navigate this complex infrastructure. 

 

The Senate Finance Committee voted earlier this month to extend a number of tax credits that will support continued investment in advanced energy technologies. The package approved by the committee extends vital tax credits through the end of 2015 for advanced energy technologies such as wind power, energy efficient buildings, smart grid infrastructure, advanced fuels, and advanced transportation. The following table highlights a number of the changes included by the committee:

 Generation

  • Renewable Electricity Production Tax Credit (PTC; Section 45) with option to claim the Business Energy Investment Tax Credit (ITC; 48) instead
  • Bonus Depreciation (168)

 Efficiency

  • Energy-Efficient Commercial Building Deduction (179D)
  • Residential Energy Efficiency Credit (25C)
  • Energy-Efficient New Homes Credit (45L)

 Transportation 

  • Alternative Fuel Vehicle Refueling Property Credit (30C)
  • Alternative Fuel and Fuel Mixtures Credit (6426)
  • Biodiesel and Renewable Diesel Credit (40A)
  • Second Generation (Cellulosic) Biofuel Producer Credit (40)
  • Special Depreciation Allowance for Second Generation Biofuel Plant Credit (168)

Some important provisions were left out of the legislation, however, including a change to the Investment Tax Credit that would allow developers to claim the credit so long as projects “commence construction” by the end of 2016, something that AEE has strongly supported. Some solar and fuel cell projects can take years to develop and need tax certainty to obtain financing. This adjustment – from requiring that projects be placed in service to simply starting the construction process – was previously made for the production tax credit, and helped support continued investment in the U.S. wind industry.

 

The U.S. Department of Energy is breathing new life into its advanced energy loan programs, with Energy Secretary Ernest Moniz telling a Congressional panel last week that it would likely begin accepting new applications for loan guarantees for renewable energy projects in the second quarter of this year. The Department also sent a letter last week to automotive manufacturers informing them that its Advanced Technology Vehicle Manufacturing Loan program still had $16 billion in authorized capital for eligible projects, and that it had taken steps to streamline the application process.  Secretary Moniz highlighted the program, including the broad range of technologies eligible for support, in a speech to the Motor & Equipment Manufacturers Association Annual Legislative Summit on Wednesday.

 

In the private sphere, solar developer SunEdison announced recently that it had sold a bundle of residential solar projects to a wholly owned yieldco, with plans to list SunEdison YieldCo later this year. The yieldco, which includes projects developed by SunEdison as well as those acquired from third-party developers, was created using a $250 million credit facility from Goldman Sachs. The development represents the first pure solar yieldco, as existing yieldcos typically blend solar and other renewable projects with conventional power projects.

 

While yieldcos have been around for years, they have garnered new attention within the advanced energy industry in the last eighteen months as another tool to securitize assets, access public markets, and drive down the cost of capital. As its core, a yieldco is a publicly-traded company that owns operating assets that produce positive cash flows, with the revenues distributed to investors as dividends.

 

More Energy Finance News In Brief

  • California has approved a $10 million mortgage reserve program to make PACE energy efficiency programs more bankable.  

  • The first privately financed Property Assessed Clean Energy (PACE) project in Michigan was announced by Lean & Green Michigan, which is building a statewide PACE district. The project announced last week will fund $1,000,000 of improvements to a law firm in suburban Detroit, with $500,000 to be financed through PACE. Funding for the project is being provided by Comerica Bank.

  • Minnesota is considering a bill that would allow residential customers to pay for insulation, energy-efficient appliances, and even solar panels through a line item on their utility bill.

  • U.S. biofuel developer Cool Planet Energy Systems, Inc. raised $100 million, including $50 million in equity, to finance a 10 million gallon Louisiana biofuel facility, the company’s first.  Existing investors in the facility include Google, GE, BP, ConocoPhillips, NRG Energy and Exelon Corp.

  • SunSpec Alliance announced a partnership with GTM Research to provide data analytics on distributed solar performance to the development and finance communities as a way of increasing transparency, better characterizing the risk profile of projects, and improving access to capital.

Energy Finance Resources

DOE Federal Energy Efficiency and Renewable Energy Finance Guide 

 

The U.S. Department of Energy has published A Guide to Federal Finance Facilities Available for Energy Efficiency Upgrades and Clean Energy Deployment. The downloadable guide provides information about the various federal financing programs available for energy efficiency and renewable energy -- making it easier for state, local and tribal leaders, along with their partners in the private sector, to find capital for energy efficiency and renewable energy projects.

 

AEE's Monthly Energy Financing Newsletter

 

Every month, AEE sends out a newsletter with energy financing news, events, and unique opportunities. Sign up for the newsletter by clicking the button below.

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Topics: Energy Finance

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