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Solar Technology
Justin Baca
Vice President of
Markets and Research
Terminology

Power = Voltage x Current Energy = Power x Time

• Measures instantaneous draw of an • Sustained delivery of a certain amount of
electrical load, or the output capacity of a power
generator • Kilowatt-hour (kWh)
• Watt (W) • Megawatt-hour (MWh)
• Kilowatt (kW)
• Megawatt (MW)
• Gigawatt (GW)
• Terawatt (TW)

Direct Current (DC) and Alternating Current (AC)

Photovoltaic Modules = Solar Panels

Negative 🡪🡪
Positive 🡪🡪

Source: Revision Energy

 Types of PV Modules

Monocrystalline Multicrystalline Thin Film

Primary Crystalline Silicon Supply Chain
 Crystalline PV Modules

Product photos: JinkoSolar, Renogy, Renewable Energy World

 Thin-Film
PV Module
Basic PV
Module
Components
• Back of Crystalline
Silicon panel:
• Junction box affixed
to backsheet
• Connectors
• Cables
• Potting Material Product photos: Renogy, Tigo, Solar Professional
Photovoltaic System

Source: DuPont
Inverters
• Inverter
• Converts the DC
energy produced
by the panel to AC
energy
• For rooftop
systems, a ‘string’
inverter or a
microinverter
(module level)
may be used
Product photos/graphics: SMA America, Enphase/Greentech
Media, SolarBridge/HomePower Magazine
Module Level Power Electronics (MLPE)
Mounting
Systems
• Consist of rails,
clamps, mounts,
mounting
hardware and
roofing
attachments

Product Photos: S-5!, PanelClaw, QuickMount PV

Mounting Systems Ballasted
Solar Trackers / Tracking Systems

Photo: NEXTracker, RBI Solar

Tracking System Types

Single Axis Dual Axis

Building Integrated Photovoltaics (BPV)

Photos: Architectural Solar, Schueco

Utility-Scale Solar PV Project Examples

Photos: Recurrent Energy’s Sunset Reservoir in San Francisco, California and SunPower's 250MW California Valley Solar Ranch
Utility-Scale
Solar PV Inverters
• Utility-scale inverters serve the
same function as string
inverters, just with a much
larger load and scale to
manage
• Often sized at 500kW to
750kW
• Some larger projects choose
to employ high-efficiency
string inverters instead of
central utility-scale inverters
Photo: SMA America
Market Segmentation
Shawn Rumery
Senior Director of Research
 Massive Growth Since 2000 Sets
the Stage for the Solar+ Decade

• Solar has experienced an

average annual growth rate of
33% in the last 10 years
• Strong federal policies like the
solar Investment Tax Credit,
rapidly declining costs, and
increasing demand across the
private and public sector for
clean electricity has sped solar
deployment
• There are now more than 121
gigawatts (GW) of solar
capacity installed nationwide,
enough to power 23.3 million
homes.
SEIA/Wood Mackenzie Power & Renewables U.S. Solar Market Insight 2021 Year in Review
 Residential Solar
Photovoltaic (PV)
Typical rooftop PV systems on single
family residential properties:
• Capacity: 1-20 kW (average 8 kW)
• Sized to account for majority of yearly household
electricity use (but not more than)
• Normally grid-connected
• Uses net energy metering (NEM)
• Residential entity is electricity off-taker
• Average cost: $3.10/watt in Q4 2021
• Average cash system cost: ~$20,000
• Finance Options
• Third Party Ownership (Lease/PPA)
• Debt Financing through installer
• Self-financed
• 18% Market Share in 2021
Cumulative U.S. Residential Solar Installations by State (MW)
Commercial and Industrial Solar Photovoltaic (PV)

Typical roof or ground-mounted installations at commercial,

industrial, government or non-profit properties:
• Capacity: 1-5000+ kW (average 130 kW)
• Sizes vary widely depending on business and site
• Normally grid-connected
• Uses net energy metering (NEM)
• Commercial entity is electricity off-taker
• Average cost: $1.55/watt
• Average system cost: ranges widely
• Finance Options
• Third Party Ownership (PPA)
• Debt Financing through installer
• Grants and/or bonds for certain entities
• Self-financed
• 6% Market Share in 2018
Cumulative U.S. C&I Solar Installations by State (MW)
Utility-Scale Solar Photovoltaic (PV)

Typical ground-mounted installations in a variety of open spaces

(desert, brownfield, grassland, cleared land other reclaimed land):
• Capacity: 1+ MW (average 76 MW)
• Can exceed 1,000 MW in largest multi-phase projects
• Sells electricity on wholesale market
• Utility, Independent Power Producer or Corporate-owned
• Electricity off-taker is utility or large corporate
• Average cost: $1.06/watt (single axis tracker)
• Average system cost: ranges widely
• Finance Options
• Multi-party arrangements
• Debt, Equity, Tax Equity
• 72% Market Share in 2018
Cumulative U.S. Utility-Scale Solar Installations by State (MW)
Community Solar Photovoltaic (PV)
Ground-Mounted Installations on Greenfields or
Brownfields:
• Capacity: Generally 1 – 5 MW
• Smaller or larger projects are possible depending on state
regulations
• Utility-Led or Third-Party Led
• Electricity from Project is sold to residential and commercial
customers
• Typically executed through PPA or virtual PPA
• Average cost: $1 - 2/watt
• Hardware and installation cost profile similar to utility-scale
• Customer acquisition and servicing increases all-in cost
• Finance Options
• Multi-Party Arrangements (includes subscriber deposits)
• Debt, Equity, Tax Equity
• 4% Market Share in 2018
Cumulative U.S. Community Solar Installations by State
 Other

Solar Service
Provider
Contractor/

Companies Consultant
Installer

by Business
Type Distributor

Project
Developer

Manufacturer/Supplier
 Solar as an Economic Engine

• As of 2020, more
than 230,000
Americans work in
solar at more than
10,000 companies in
every U.S. state.
• In 2021, the solar
industry generated
nearly $33 billion of
private investment in
the American
economy.
Source: National Solar Jobs Census 2020
Growth in Solar is Led by Falling Prices

• The cost to install solar has

dropped by more than 60% over the
last decade, leading the industry to
expand into new markets and
deploy thousands of systems
nationwide.
• An average-sized residential system
has dropped from a pre-incentive
price of $40,000 in 2010 to roughly
$20,000 today
• Recent utility-scale prices range
from $16/MWh - $35/MWh,
competitive with all other forms
of generation.

SEIA/Wood Mackenzie Power & Renewables U.S. Solar Market Insight 2021 Year in Review
 Solar PV Growth Forecast
• The U.S. Solar market installed a record
23.6 GW in 2021, despite supply chain
challenges brought on by the pandemic
and trade disputes.
• Pricing and procurement challenges will
continue to impact deployment in 2022,
leading to the first annual decline in the
market in 4 years.
• Assuming supply chain recovery and no
major trade barriers, growth should
resume in 2023 ahead of Investment Tax
Credit step down in 2024.
• Barring new policy developments at the
state and federal levels, industry growth
through the end of the decade is premised
on continued price declines and growing
demand from utilities, states, corporations,
and distributed solar customers.
SEIA/Wood Mackenzie Power & Renewables U.S. Solar Market Insight 2021 Year in Review
Market Regulation 101
Kevin Lucas
Senior Director of Utility
Regulation and Policy
 Overview and Goals
• The Power Grid is a phenomenally complex achievement that permeates all
aspects of our modern economy
• This complexity extends to engineering, policy, regulation, and societal issues

Operation of the Federal / Regional Environmental

State Regulation
Grid Regulation Considerations

- Planning for Reliability - Tax Policy

- Utility Regulation
- Safe and Reliable - PURPA - Decarbonization
- Rate Design
Operation - RTOs / ISOs - High Renewable
- Net Metering Penetration Challenges
- Power vs. Energy - Transmission
- Renewable / Clean Planning - Electrification of
- Supply / Demand
Energy Standards Everything
Balance - Energy Imbalance
- Energy Efficiency Markets - PV vs. Other Tech.
- Role of Energy
Standards
Storage, Flex Demand - Carbon Pricing
What is the Power Grid?
A Series of Tubes!
• The traditional power grid
• Creates power at central generating
plants…
• Transmits it long distances through
transmission lines…
• And delivers it to homes/businesses
through a distribution network
• The evolving power grid uses the
infrastructure above, but adds:
• Distributed generation closer to loads
• Load flexibility that can adjust to supply
• Energy storage that helps to balance
43
 Regulatory Compact

• Consolidation in 1920s lead to market power

• 1935 Federal Power Act addressed some of these issues
• Regulatory Compact is an agreement between utility and public
• Utility receives
• Timely cost recovery of prudent expenditures
• Guaranteed (and regulated) opportunity to earn return on assets
• Monopoly control over a particular geographic area (franchise rights)
• Public receives
• Investment in essential, but high cost of capital services
• Regulatory oversight of utility
• Control of prices and approval of new expansions through regulatory oversight

44
 Federalist Nature of Energy Market Regulation
• Federal Regulation • State Regulation
• Intrastate sales • Power plant and transmission siting
• Renewable Portfolio Standards
• Bulk power grid management and
• Energy Efficiency Standards
operation • Demand Response Programs
• Transmission planning • Customer Choice / Retail Access
• NERC reliability obligations • Integrated Resource Planning
• Hydroelectric dam licensing and safety • Distribution Resource Planning
• GHG reduction* • GHG reduction
• Net metering
• Electric vehicle infrastructure
*Clean Power Plan and Clean Electricity Performance Program • Retail rates and rate design
were examples of federal approach to GHG reduction, but many • Local reliability/resilience
aspects were to have been implemented by states. National
carbon price/tax would need to be federal, but states/regions have
• Electricity usage data access
already enacted these programs • And more…

45
 Vertical Integration vs. Restructured Markets

• Vertical Integration
• Utility owns generation and
distribution system
• Fuel costs passed through as
expense
• Restructured
• Utility owns distribution only
• Market sets power supply costs
• Retail providers compete for
customers

46
 Vertical Integration vs. Restructured Markets

• Vertical Integration
• Utility owns generation and
distribution system
• Fuel costs passed through as
expense
• Restructured
• Utility owns distribution only
• Market sets power supply
costs
• Retail providers compete for
customers
47
 Wholesale Market Common Designs
• Energy Market ($/MWh) • Capacity Market ($/MW-Day)
• Day Ahead and Real Time • “Long-term” market for reliability
(Balancing) markets • Typically annual auction for 1 year
• Security constrained, economic price several years in future
dispatch model based on market • PJM, ISO-NE: 3 years forward
demand • MISO: 1 year forward, residual market
• 1 hour (DA) and 5 minute (RT) blocks • NYISO: Monthly
• Hundreds of physical locations • Administratively determined
• All generators are paid clearing demand curve
price regardless of their bid • Minimum bid price for new
generators

48
 How are Retail Rates Set?
• Typically, rates are set in a Base Rate Case with a similar process
• Scope depends on a host of factors
• Vertically integrated or deregulated? Decoupled? Public Utility, Investor-Owned
Utility, Rural Coop?

How Much Revenue How Should Costs be How Should Revenue

Should Utilities Allocated? be Recovered?
Receive? Cost of Service Study Rate Design
Revenue Requirement • Determine why costs are • Determine how to recover each
• Utility-proposed revenue needed incurred class’s revenue requirement
to cover costs and earn a • Energy, demand, fixed • Rate typically composed of:
reasonable rate of return on • Determine what class uses • Fixed (customer charge)
assets equipment • Demand (kW-based)
• RR = OpEx + (Net Assets * ROR) • Residential, commercial, • Energy (kWh-based)
• Depreciation of assets and tax industrial
on revenues included • Propose allocation of costs to
each class

49
 Current and Evolving Policy/Tech Issues

• Current Topics • Evolving/Future Issues

• Net metering and successors • FERC Order 2222 and DER
• Value of Solar aggregation
• Rate Design for DERs • Bi-directional vehicle-to-grid
• High renewable penetration • “Insert here”-as-a-service
• Electrification of transportation • “Macrogrid” and HVDC
and building loads transmission overlays
• Shift to winter peak • Offshore wind
• Interconnection challenges • Integrated IRP/Distribution
• Land use / NIMBY System Planning
• DERMS
50
Solar Policy 101
Jeremy Woodrum
Senior Director of
Congressional Affairs
Key Terms in Congress and Admin

• Tax Policy Terms

• Investment Tax Credit; solar, storage, transmission; PTC; PBTC;
Build Back Better
• Financing (direct pay)
• Labor and Domestic Content/Manufacturing Policy
• Non-solar-specific, but impacts solar
• Key Committees: House, Ways and Means; Senate, Finance

• Non-Tax Congressional Policy

• Low-income community solar, IIJA, transmission, net metering,
supply chain, REAP, transmission, DOE Solar Energy
Technology Office, migratory birds
• Key Committees: Select Committee on Climate Crisis,
Appropriations, Natural Resources, Energy and Commerce,
Finance, Energy and Natural Resources, Environment and
Public Works
Key Terms in Congress and Admin
• Tax Policy Terms
• Investment Tax Credit; solar, storage, transmission; PTC; PBTC; Build Back Better
• Financing (direct pay)
• Labor and Domestic Content/Manufacturing Policy
• Non solar-specific, but impacts solar
• Key Committees: House, Ways and Means; Senate, Finance

• Non-Tax Congressional Policy

• Low income community solar, IIJA, transmission, net metering, supply chain, REAP,
transmission, DOE Solar Energy Technology Office, migratory birds
• Key Committees: Select Committee on Climate Crisis, Appropriations, Natural
Resources, Energy and Commerce, Finance, Energy and Natural Resources,
Environment and Public Workds
Key Terms in Congress and Admin

• Trade/Supply Chain Policy

• 201 Tariffs
• 301 Tariffs
• 232 Tariffs
• Antidumping/Countervailing Duty and
Circumvention
• Withhold Release Orders and UFLPA

• Federal Affairs
• Notice and Comment Rule-Making
• Engagement with Agency Staff (safe harbor, CEQ
clean energy projects)
• Litigation
 • Information and Best
Practices Sharing
SEIA • Research and Reporting
Strategies • Media Narrative

& Tactics • Advocacy Campaign

Coordination
• Political Action Committee
Questions?
Environmental Justice 101
Erika Symmonds
Vice President of Equity and
Workplace Development
Basic Human Desires
• Clean air
• Clean water
• Healthy communities
• Equitable power to impact policies and
projects that impact their day to day lives

Environmental Justice
requires having these things no
matter your race, wealth, zip
code, religion, etc.
 Environmental Justice Definition
Recognition and remediation of the disproportionately
high and adverse human health or environmental effects
on communities of color and low-income communities.

Source: Robert D. Bullard & Glenn S. Johnson, Environmental Justice: Grassroots Activism and
the Impact on Public Policy Decision-Making, 56 J. of Soc. Issues 555, 558 (2000).
 • Can I get a sewage plant with a side
of bus depot?
True • Get your hazardous hog farm here
• Now you see it, now you don’t– the
Stories disappearing mountains and
streams of your hometown
• Coal Ash keeps falling on my head
Environmental Justice – It’s a Movement

Source: https://iejusa.org/section-1-defining-energy-justice/
Where does solar+ come in?
In the News
 Agenda
• Introduction
• Project financing, tax benefits, and
tax equity
• Storage overview

• Tax equity for storage

projects
• Qualifications and structuring
• Pricing, challenges, and landscape

• Capital stack dynamics

• Interaction of debt and tax equity

• Looking ahead…

70 Powering the Solar+ Decade | 4/4/2022

Finance and Tax Basics
Tony Grappone
Partner
Novogradac & Company LLP
 Agenda

Analyzing how Other hot

Overview of Example of Illustrating the investor Discussion of topics in solar
primary tax how to how to evaluates tax alternatives to • Storage and
benefits for calculate tax monetize tax benefits in this simplified overview of the
solar projects benefits benefits determining example basic rules
their return

72 Powering the Solar+ Decade | 4/4/2022

 Primary tax benefits for solar projects
Generally worth the amount of the deduction multiplied
by the owner’s effective tax rate
People talk about “depreciation” benefits however it’s
Accelerated really net taxable income/(loss)
Tax • At the end of the day the depreciation benefits are
Depreciation equal to the owner’s share of net taxable loss
multiplied by their effective tax rate
• For example, if an owner is allocated $100K of net
taxable loss and a tax rate of 21%, then their
depreciation benefit is $21K.
Note that you have to reduce depreciable basis by 50%
of the ITC (more on that later).

Generally worth Investment

dollar for dollar Tax Credit

73 Powering the Solar+ Decade | 4/4/2022

 What are the tax benefits worth
and how are they monetized?
• Assume that you’re building a project that will ultimately cost $11,000,000 to become operational
• Assume that, as part of the financing, you’re trying to raise $2,800,000 from a tax equity investor
• Assume you’re trying to offer a tax equity investor a 10% after tax return on investment (ATROI)
• You’ve learned that tax rules require tax equity investors to stay in the deal for at least the first
five years of operations.
• You’ve also heard that, as part of their overall expected benefits and to satisfy certain tax rules,
tax equity investors require cash returns equal to
• At least a 2% annual priority return as well as a 5% call price to exit the deal.
• Pref: $2.8MM @ 2% = $56K per year @ 5 year minimum investment period = $280,000
• Call exit payment: $2.8MM @ 5% = $140,000.
• Total minimum cash to tax equity investor = $420K
• Note: we’re talking about a typical partnership flip structure

74 Powering the Solar+ Decade | 4/4/2022

 Let’s see what benefits we can offer them

First let’s look at the tax credits

• Basic example assuming a project is placed

in service for a total cost of $11,000,000
• Assume 88% is eligible for the ITC, thus
$9,712,510 is eligible for the ITC
• As a result, the ITC, assuming an ITC % of
26% equals $2,525,253
• Assuming up to 99% could be allocated to a
tax equity partner in the amount of
$2,500,000

75 Powering the Solar+ Decade | 4/4/2022

 Let’s see what benefits we can offer them.
Now let’s look at the tax depreciation benefits
• Big picture, at the end of the day, the investor can only get tax benefits related to tax losses up to
the amount of capital they invest, minus the ITC basis reduction and minus whatever they get back
in the form of cash returns
• Therefore, if the investment is $2.8MM and their share of the ITC basis reduction is $1,250,000
($2.5MM @ 50%).
• The max loss basis before considering cash returns would be $1,550,000.
• Next, reduce the amount above by anticipated cash returns of $420K
• Based on the above math, the max loss basis is $1,130,000.
• Multiplied the max loss basis by a 21% tax rate and you get $237,300 in max depreciation benefits.

76 Powering the Solar+ Decade | 4/4/2022

 Let’s see what benefits we can offer them.

Let’s compare the investor’s benefits to their investment and see if we’re
achieving the targeted ATROI

$420,000 $237,300
$2,800,000 cash ($280K of
$3,157,300
Tax
pref plus TOTAL
ITCs depreciation
$140K of exit BENEFITS
benefits
call proceeds)

77 Powering the Solar+ Decade | 4/4/2022

 Let’s see what benefits we can offer them.

$3,157,300 $2,800,000 1.13

Total benefits Investment ATROI

1.13 ATROI beats the target of 1.10

• As a result the sponsor may be able to negotiate for money from their tax equity investor.
• A $2.9MM tax equity investment in this case would provide the 1.10 ATROI.

78 Powering the Solar+ Decade | 4/4/2022

 Alternatives to the above:
• Instead of ATROI, some investors prefer to analyze based on after tax IRR
• My example assumes a time based flip however some deal participants prefer a yield based flip.
• In addition to priority returns of cash, there may be additional variable cash flow that goes to the
investor
• Assumed the investor is redeemed after the flip pursuant to the call option.
• My example assumes a 5% call option however in real life it’s based on the FV of the investor’s
interest
• While most investors are bought out of the deal after the 5 year ITC recapture period, some
actually prefer to stay in for the life of the partnership
• Instead of a flip, could have used an inverted lease structure. No ITC basis reduction in that
structure, ITC calculated at FV and then 50d income to the credit recipients.
• Could have also used a sale leaseback structure. I featured a basic flip type scenario because it
tends to be the most common

79 Powering the Solar+ Decade | 4/4/2022

 Storage and solar
• Can’t be owned by a public entity (i.e. federal government)

• Must be part of a new solar facility (can’t be standalone,

which BBBA sought to change)
• If not part of a new facility, no ITC and 7yr MACRS

• More than 75% of the battery’s charge must come from renewable energy
• Assuming more than 75%, whatever % of the battery’s charge that comes
from solar is the % used to determine the portion of the 26% ITC you qualify
for
• Battery EB of $1MM @ 26% = $260K @ 90% of battery charge that came
from solar = $234K

80 Powering the Solar+ Decade | 4/4/2022

Tax Equity for Storage Projects
Emily Tregidgo
Senior Manager
AES Clean Energy
 I.R.C. Section 48: Investment Tax Credit (“ITC”)
Tax Incentives:
•
• The ITC is a tax credit that can be claimed on federal
corporate income taxes for x% of the cost of a solar

Solar ITC facility that is placed in service during the tax year.
The ITC is available at the time a facility is placed in

Qualifications
service.
• Eligibility: qualifying energy property
• Begun Construction Requirement
• The determination of when a project began
Solar ITC construction dictates what amount of credit is
available to each project. Because the credit
Date Placed in Service ITC amount can vary from year to year, this is a
Construction Date Amount
Begins critical item when evaluating the risks and
Before 1/1/2020 Before 1/1/2024 30%
economics of each project.
• Two tests to determine when construction
Calendar 2020 Before 1/1/2024 26% began:
• 5% Safe Harbor
Calendar 2021 Before 1/1/2024 22%
• Physical Work of a Significant Nature
Before 1/1/2022 On or after 1/1/2024 10% • Continuity Safe Harbor:
• Both ITC and PTC projects must be placed
On or after Any 10%
1/1/2022
in service within four calendar years of
when construction began
83
 Tax Equity Partnerships: Value Drivers

Revenue Dynamics Tax Appetite Monetization

• Cash distributions • Project developers/ • The amount of tax

• Taxable sponsors have low tax equity financing is
income/(losses) appetite and generally derived from the
cannot utilize tax benefits amount of credits
• Tax credits
• Developers/sponsors • Monetization of tax
• GAAP earnings/(losses) partner with companies credits is a large
that have high tax economic driver of
appetites to more renewable energy
efficiently monetize the projects
benefits

84
 Federal Tax
Incentives For
Energy Storage
Systems

ITC Qualifying Storage Facilities

Standalone Storage Solar + Storage
• Solar + storage projects do qualify, under certain conditions:
• Under current tax regulations, standalone storage
75% Cliff (charging requirement)
facilities do not qualify for the ITC •
• Construction begun requirement applies for solar + storage facilities
• No specific guidance regarding depreciation
schedule (MACRS treatment) • Eligible for 5-year MACRS
• Enables the participation of a tax equity partner, and effectively
• As such standalone storage projects can be more
reduces upfront costs for the sponsor
expensive for the sponsor

85
Source: NREL, https://www.nrel.gov/docs/fy18osti/70384.pdf
 Structuring and Sample Calculation
100 MW PV + 50MW BESS; 100% 100 MW PV + 50MW BESS; 80%
Charging from Renewables Charging from Renewables
$200 $200
$180 $180
$160 $160
$140 $140
$120 $120
$100 $100
$80 $80
$60 $60
$40 $40
$20 $20
$0 $0
ITC Credits Total Capex ITC Credits Total Capex

The percentage of charge from renewables and

revenue streams informs structuring
86
 Pricing, Challenges, and Landscape

Pricing Challenges Landscape

• Generally size TE for • Challenges associated • Build Back Better – the
coupled systems with a newer technology potential for a standalone
assuming 100% of the related to engineering storage ITC Credit
battery will be charged
• These include finding IEs • Developers have found
from the system; there are
with storage experience, ways around a lack of
risks if this is not the case
and coming to consensus standalone storage ITC
• TE pricing is generally in- on the useful life of the credit for those systems:
line with TE for PV-only batteries sourcing “green” electrons
systems (investor can be • Commissioning the for charging
protected from risks batteries is also more
above) time-intensive than
commissioning the PV

87
Debt and Tax Equity
Shariff Barakat
Partner
Akin Gump Strauss Hauer & Feld LLP
 Tax Equity
• 99% max and 5% minimum tax
allocations to tax equity investor.
Cash distributions
Sponsor / Tax Equity
Cash distributions • 20% of tax equity capital must be
Period 1: 100% Period 1: 0% contributed as of the earlier of the
Period 2: 0% Developer Investor Period 2: 100%
Period 3: 95% Period 3: 5%
project in-service date or investor
admittance date, and 75% must be
Taxable income (loss) Taxable income (loss) non-contingent.
Period 1: 1% Tax Equity
Period 1: 99% • Sponsor allowed to have an option
Period 2: 1% Partnership
Period 2: 99%
Period 3: 95% Period 3: 5%
to purchase investor’s interest for
FMV.
Project • Sponsor cannot guarantee
Owner performance, tax structure, or
generation or allocation of tax
credits.

90 Powering the Solar+ Decade | 4/4/2022

 Project-Level Debt

• Key Issues: Sponsor / Tax Equity

Developer Investor
• ITC Recapture
• Partnership Allocations
• Notice and Cure Rights
• Cross-Collateralization / Default Tax Equity
• Lender Step-in Rights Partnership

Lender Project Owner

91 Powering the Solar+ Decade | 4/4/2022
 Back-Leverage Debt

• Solves: Sponsor / Tax Equity

Lender
• Project-level recapture concerns Developer Investor

• Tax allocation concerns

• Unique Issues Tax Equity

Partnership
• Cash diversion restrictions

• Transfer / Foreclosure mechanics

Project
Owner
92 Powering the Solar+ Decade | 4/4/2022
 Inverted Lease / Lease Passthrough Debt
Tax Equity Sponsor /
• Mix of Features Investor Developer

• Rent often structured to

meet debt service, but Project
lender loses first claim on Lessee
cash flow

• Lender can sell project in HoldCo

foreclosure subject to
lease Lease

• Collateral package can Project

Lender
impact tax structure Owner
requirements
93 Powering the Solar+ Decade | 4/4/2022
 C&I / DG

• More common to see project-level term debt

• State-specific regulatory environment and

incentives are key

• Growing volume of community solar

• Growing volume of solar + storage

94 Powering the Solar+ Decade | 4/4/2022

 Lender & Tax Equity Interparty Agreements
• 80% Tax Equity Funding
• 20% Tax Equity Funding • Substantial Completion • End of 5 Year
• Mechanical Completion • Placement in Service • Term Conversion on Debt Compliance Period

1 2 3
Notice and Cure – Notice and Cure – Notice and Cure
Lender often has step- Lender often has step- Lender and Tax Equity each often
in rights in rights have notice and cure rights. For back
leverage, lender usually has step-in

No forbearance – “Partial” forbearance –

20% contribution Requirements “Full” forbearance –
refunded in regarding 20% limited exceptions may apply
foreclosure contribution vary
95 Powering the Solar+ Decade | 4/4/2022
 Bizzabo App Instructions
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1. Download the free Bizzabo App on your mobile device.

2. Open the app and enter the email address you registered for the event with.

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‘Confirm Your Email’ and the app will open to the homepage. (Check your SPAM
messages if you don’t see the email.)

4. Click on "Community" on the homepage to view the list of registered attendees and
start connecting by sending direct messages to other attendees.