Invest in Our Federal Renewable Energy Tax Credits

Federal Renewable Energy Tax Credit

  • Investment sponsors must be well-financed and have a track record of successful installations and operations of projects.
  • Investors receive significant permanent GAAP income due to the unique tax rules for solar ITC.
  • Investing in solar ITC will also generate a lower effective tax rate.
  • The projects are structured so Investor receives 99% of the P/L and cash flow for the first 5 years and then receives a 5% interest going forward.
  • Bonus Depreciation: Solar projects qualify for bonus depreciation. Investors will receive significant depreciation benefits in the first year.
  • After-tax returns in the initial year often approximate 103% of invested capital.
  • Cumulative after-tax returns approximate 13%.
  • Recapture risk is negligible, unlikely and ratably reduced each year. Recapture insurance can be acquired to cover risks related to the ITC.
  • Tax risk attributable to changes in tax law is also protected.
  • ROIs typically range from 8 to 20%;
  • Excess credits can be carried back one year and carried forward for twenty years.
  • Permanent book versus tax difference reduces effective tax rates.
  • Revenue is generated from a long-term PPA with an investment-grade utility or corporation.
  • The average annual amount of sunshine on the project is generally known.
  • Equipment degradation is 0.5 to 1% per year.
  • Operating costs are minimal.
  • Debt service is known.
  • Positive cash flow net of debt service is immediate.
  • Insurance policies are obtained to cover force majeure events, equipment failures and other defects.
  • Recapture of tax credits in the solar industry is unprecedented.
For more information, contact Peter Rourk

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