Fresh Energy's 2013 Power Breakfast | Sara Bergan: Case Study
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Fresh Energy's 2013 Power Breakfast | Sara Bergan: Case Study

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The first event of a three-part Solar Opportunities Series, Fresh Energy’s annual Power Breakfast outlined new and exciting solar opportunities for business and property owners. Learn more at ...

The first event of a three-part Solar Opportunities Series, Fresh Energy’s annual Power Breakfast outlined new and exciting solar opportunities for business and property owners. Learn more at fresh-energy.org/solarseries.

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Fresh Energy's 2013 Power Breakfast | Sara Bergan: Case Study Presentation Transcript

  • 1. 1 Making Minnesota Solar Pencil Solar Power Series Sara Bergan September 24, 2013 ● St Paul, Minnesota ● Solar Power Series
  • 2. 2 Development and Finance
  • 3. 3 Bringing $ Into the Project
  • 4. 4 Tax Equity • Federal Investment Tax Credit – One time credit against income tax based on amount invested in facility • Energy property/qualifying equipment • 30% of tax basis of qualifying property • Entirely in year placed in service – Placed in Service before January 1, 2017 • Accelerated Depreciation $
  • 5. 5 Tax Equity • Threshold Questions: – Can the Owner Use the Credits and Losses? – How Does Ownership Affect Project? $
  • 6. 6 • Tax Equity Investor – Late Stage Development/Placed in Service – Ownership stake for a Minimum of 5 Years • Investor takes portion/all credit & depreciation benefits • Meet Required IRR – Size/Portfolio Tax Equity$
  • 7. 7 Developer Consumer Power Sales SPV/SPE Tax Equity: Sale Lease Back Developer Sells System Leases back Installation Investor $
  • 8. 8 Partnership ITC + Depreciation Developer 1% pre-flip 95% post-flip 99% pre-flip 5% post-flip Power Purchaser Investor Tax Equity: Partnership Flip$
  • 9. 9 Tenant 99% TI, 1% MM Managing Member/ Developer Affiliate Depreciation Energy Sales/Use income Power Purchaser/User Investor Tax Equity: Inverted Lease Owner 51% MM, 49% MT SP1 SP5 SP2 SP6 SP7 SP4SP3 SP8 Rents Credits & Depreciation Capital Contribution Developer Guaranty? Capital contribution Tax Credits $ nvestment Lender/ Sponsor
  • 10. 10 Debt • Construction/Permanent • Dependent on project revenues for debt service • Longer Term Involvement in Project • Coordination with Tax Equity $
  • 11. 11 Energy • Behind the Meter – Net-Metered Facilities Contract • Under 40 kW, retail: 40-1,000 kW, avoided cost – Value of Solar • Optional alternative to Net Metering – (Community Solar Gardens) • Wholesale Sales to Utility – PPA $
  • 12. 12 Energy (Contracts) • Term • Price • Maintenance/Curtailment/Abandonment • Buyer Termination Rights/Purchase Option • Damages • Cross Defaults • Ability to Assign/Transfer of Ownership $
  • 13. 13 SRECs • The attributes associated with 1 MWh of energy generation from solar facility • As part of a PPA may be part of a broader Environmental Attributes transfer • For the purposes of tracking systems, follows state policy $
  • 14. 14 SRECs • Revenue Stream – $100-300/MWh • New England States Critical to Project Development Source: http://www.srectrade.com/srec_prices.php $
  • 15. 15 SRECs • Minnesota: – Net-Metering • Not addressed in Legislation/ Assigned to utility? – Value of Solar • Incorporated • In addition to other EA valuation/calculations? – Bilateral Negotiations/PPA – Market for Unbundled SRECs? $
  • 16. 16 Incentives • Smaller Scale Distributed Projects – Made in Minnesota • 40 kW and under • Production incentive – Solar Energy Production Incentives • 20 kW and under • 5 program years (5,000,000), 10 payment years $
  • 17. 17 Reducing Transaction Costs • Consider Finance Goals at the Beginning • Prepare for the Process & Costs – Coordination Tax Equity & Debt $
  • 18. 18 Sara E. Bergan Minneapolis, Minnesota 612-373-8819 sebergan@stoel.com Thank You!
  • 19. 19
  • 20. 20
  • 21. To order any of these books please contact Carlene Richardson at cvrichardson@stoel.com To join the Stoel Rives Renewable Energy mailing list and ensure direct delivery of future alerts, go to www.stoel.com/subscribe.