More Investors Drawn to Wind, Solar Tax Deals as Credits Renewed

  • At least $11.5 billion of tax equity invested in 2015
  • `We have some level of regulatory stability' with extensions

Tax-equity financing for U.S. renewable energy projects increased 14 percent in 2015 and is expected to attract more participants this year after Congress extended key incentives and provided long-term visibility for the industry.

Companies poured $11.5 billion into tax-equity deals for wind and solar farms last year, up from $10.1 billion in 2014, John Eber, managing director and head of energy investments at JPMorgan Chase & Co., said on a webinar hosted Wednesday by law firm Chadbourne & Parke LLC.

The number of investors may increase in 2016 “now that we have some level of regulatory stability,” Jack Cargas, a managing director at Bank of America Corp., said on the webinar.

There were 20 investors in wind farms and 28 that participated in solar projects, according to JPMorgan Chase; many did both. Wind obtained about $6.4 billion, across 5.7 gigawatts, Eber said. Solar made up at least $5.1 billion of tax-equity investment, including $2.6 billion for the three leading residential companies.

In tax-equity deals, renewable-energy developers that have little or no income sell a portion of their projects’ tax credits to big investors that can apply the credits to their own tax bills. The arrangement typically appeals to large investors including Bank of America and JPMorgan Chase.

Five Years

Congress revived in December the production tax credit for wind projects, retroactively adding five years to the incentive that lapsed at the end of 2014, and also extended by five years the investment tax credit for solar projects that was due to expire at the end of 2016.

That’s going to boost installation and may make it easier to attract financing for renewable energy. It also means solar developers will be in less of a rush to complete projects this year.

“We know what ’17 looks like,” Cargas said. “There will be potentially a little less pressure.”

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