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Foss & Company is comprised of a group of experienced tax credit professionals, representing a depth of knowledge within their respective fields. In this blog series, we highlight different Foss & Company team members to shine a light on the diverse and dedicated people that help make us who we are. Olivia Park joined Foss & Company as Vice President of Investments, focusing on the placement of institutional investor capital into Foss & Company-sponsored state and federal tax credit funds. She brings 18 years of experience in financial services including capital raising, business development and investor relations within alternative asset management firms. Oliva began her career in investment banking, working at Evercore Partners in New York and Michel Dyens & Co in Paris, France, and transitioned to the buy-side working at firms including Hudson Sustainable Investments, RainMakers Private Equity, and Hurley Capital in New York. She holds a B.A. in Economics from New York University. To learn more about Olivia, read our latest Spotlight blog series installment: How did you get started in renewable energy and sustainability tax credit investing industry? Prior to Foss & Company, I worked as an Investor Relations professional at a renewable energy private equity firm for almost 7 years. I saw the positive impact sustainable investments brought to the community and grew very keen on the industry. Educating investors on this asset class was my favorite part of my job, and with the attractive tax credits it made the investments more attractive when pitching to prospective investors. When did you join Foss & Company and what interested you about the company? I joined Foss & Company in September 2024. Prior to that, I spent close to 15 years working in the alternative asset management industry. Given these types of investments were a relatively new asset class to the…
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Beyond Solar: Uncovering Post-IRA Tax Equity Opportunities in Clean Energy Technologies The Inflation Reduction Act (IRA) has made a significant impact on tax equity opportunities in the clean energy landscape. While solar and wind have historically benefited from tax incentives, the IRA broadens the scope to include technologies like energy storage and other clean energy solutions. This expansion paves the way for accelerated growth across the renewable energy sector, providing both developers and investors with fresh avenues for financial collaboration. Tax equity plays a critical role in funding large-scale, capital-intensive projects by allowing clean energy developers to partner with investors who can utilize tax credits. These partnerships provide the upfront capital necessary to launch ambitious projects, from solar farms to emerging technologies that are essential for decarbonizing the power grid. To learn more about the evolving landscape of tax equity opportunities and discover how the IRA impacts clean energy investments, download our comprehensive white paper. Dive deeper into the specific incentives and insights on leveraging tax equity to drive clean energy innovation by downloading our whitepaper today!
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With the 2024 elections resulting in a Republican sweep of the White House and both chambers of Congress, the renewable energy tax credit landscape faces potential shifts that demand proactive strategies from investors. Building upon our August 2024 analysis, this update highlights the key policy trends shaping the investment environment and offers actionable recommendations for tax equity investors and buyers of transferable tax credits. While uncertainty is a hallmark of post-election transitions, it also presents opportunities. By anticipating policy developments and adapting investment strategies accordingly, stakeholders can secure value in the evolving renewable energy market. Key Post-Election Policy Predictions Accelerated ITC/PTC Phase-Down Republican leaders have signaled a focus on reducing federal spending, which could accelerate the phase-down of the Investment Tax Credit (ITC) and Production Tax Credit (PTC). Current discussions suggest the phase-down may begin as early as 2025 or 2026, creating urgency for developers and tax equity investors to close deals while credits remain fully available. Domestic Content Requirements Strengthening domestic manufacturing is a core Republican objective, likely leading to more stringent domestic content requirements for ITC/PTC eligibility. Projects dependent on imported components may face compliance hurdles, emphasizing the importance of aligning with U.S.-based supply chains. Preservation of Certain Credits Credits that support domestic production, such as the 45X advanced manufacturing credit, are expected to retain bipartisan support. However, new limitations related to foreign entities of concern (FEOC) could restrict their applicability, necessitating careful assessment of qualifying projects. Transferability and Direct Pay While transferable tax credits introduced by the Inflation Reduction Act (IRA) are anticipated to remain, eligibility criteria, particularly for domestic content, may be tightened. This underscores the need for meticulous due diligence in credit transactions. Rollback of Electric Vehicle (EV) Tax Credits The Trump transition team has expressed intentions to eliminate the $7,500 tax credit for…
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Advanced Manufacturing Production Credit Published on November 5, 2024 – On October 24, 2024 the U.S. Treasury Department and Internal Revenue Service released final regulations (T.D. 10010) regarding the advanced manufacturing production credit under section 45X established by Pub. L. No. 117-169 (commonly called the “Inflation Reduction Act of 2022” (IRA)) to incentivize the production of eligible components within the United States. As explained in the related IRS release—IR-2024-281 (October 24, 2024)—section 45X provides a tax credit for the production and sale to unrelated persons after December 31, 2022, of “eligible components,” which include solar and wind energy components, inverters, qualifying battery components, and 50 applicable critical minerals. Only eligible components that are produced and sold in a trade or business of the taxpayer are taken into account for purposes of the section 45X credit. The final regulations define qualifying production activities, provide rules for the sale of eligible components to unrelated persons as well as special rules that apply to sales between related persons, and provide rules to address contract manufacturing scenarios. The final regulations also provide definitions of eligible components, rules related to calculating the credit, including eligible production costs and specific recordkeeping and reporting requirements. What is the new 45X tax credit program and when was it introduced? The Inflation Reduction Act of 2022 introduced the Section 45X Manufacturing Production Tax Credit (PTC) to strengthen the domestic supply chain for critical components in advanced energy production. This program allows manufacturers to claim tax credits for a variety of qualifying products, and those with vertical integration can potentially claim credits for multiple products within their operations. What are some of the implications of the 45X tax credit program? Economic Growth: The credit is expected to stimulate growth in the renewable energy manufacturing sector, leading to job creation…
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How the 2024 Election Could Reshape U.S. Tax Policy and the Future of the IRA Published October 9, 2024 – As the 2024 election approaches, a new president and Congress are set to take office in January, which means legislative action could reinvent the U.S. tax landscape. The presidential election races are underway; however, for the House and Senate, the race is increasingly important as it determines the direction of tax legislation. What is the Inflation Reduction Act and How will the Election Affect This Law? In 2022, President Biden signed the Inflation Reduction Act (IRA) into law. One year after the IRA was passed, the clean energy and climate provisions created more than 170,000 renewable energy jobs, companies announced over $110 billion in renewable energy manufacturing investments, and we are hitting our goals to reduce greenhouse gas emissions by 1 billion tons in 2030. This is beneficial for developers as it encourages them to focus on sustainability and clean energy projects in a cost-effective way. Now, for tax equity investors, this industry growth and the bonus’ from the IRA is a great increase in tax equity investment opportunities for them across the country. How will the new election affect the IRA? The United States will go to the polls in November to decide who will become the next president, and this election year can significantly impact the IRA in a few ways: Funding and Implementation: Depending on the election’s outcomes, the next president’s administration may seek to modify, expand or even scale back certain aspects of the IRA. Decisions can be made to fully implement and expand the IRA or repeal and alter provisions. Implementation and Expansion of the IRA: Depending on the winning party, this can lead to two different outcomes: The first outcome can be full implementation, which…
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Foss & Company is comprised of a group of experienced tax credit professionals, representing a depth of knowledge within their respective fields. In this blog series, we highlight different Foss & Company team members to shine a light on the diverse and dedicated people that help make us who we are. Sophie Brkovic joined Foss & Company as an Associate Vice President of Renewable Energy Project Finance on the Renewable Energy & Sustainable Technologies team. She works to manage all aspects of the transaction lifecycle for renewable energy fund investments. Prior to joining Foss & Company, Sophie served as a Research Analyst for an Energy Infrastructure investment fund where she led financial modeling, equity research and portfolio analysis. She earned her BS in Geological Engineering and MEng in Sustainable Systems Engineering from the University of Wisconsin-Madison. To learn more about Sophie, read our latest Spotlight blog series installment: How did you get started in the tax credit investing industry? I was first introduced to renewable energy tax credits while working as a wholesale energy market consultant and discussing lifetime project economics with developer clients. During my tenure as a research analyst, I discussed clean energy project economics with numerous developers globally and it became clear to me that tax equity was an important and growing portion of the capital stack. Following the passage of the Inflation Reduction Act (IRA), it was rare to complete a conversation about clean energy development in the United States without the mention of tax credits. As I sought out my next position, I knew that I wanted to be involved in the tax credit market and help distribute tax equity to developers in order to aid in the clean energy transition. Thankfully, I found that position at Foss & Company! When did you join Foss…
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Foss & Company is comprised of a group of experienced tax credit professionals, representing a depth of knowledge within their respective fields. In this blog series, we highlight different Foss & Company team members to shine a light on the diverse and dedicated people that help make us who we are. Kevin Haley has rejoined Foss & Company as Senior Vice President of Investments, after serving as a founding member of a transferable tax credit marketplace startup company. He brings substantial expertise on both tax equity and transferable tax credit transactions and supports the capital raising team to raise new tax equity funds and broker transferability deals. Prior to his work on tax credit transactions, he was a strategic advisor at the Clean Energy Buyers Association (CEBA), working with Fortune 500 companies pursuing renewable energy power purchase agreements. He holds a bachelor’s degree from Hope College in Holland, MI, and an MBA from the University of Colorado, Boulder, CO. To learn more about Kevin, read our latest Spotlight blog series installment: How did you get started in the tax credit investing industry? I began my career working on tax credit policy in Washington, D.C. My work mainly involved researching and analyzing the tax equity market, collaborating with project developers, and educating Congress and regulatory bodies on the benefits of tax credit investing for the U.S. economy. This was a great introduction to the market and after several years, I moved over to a transactional role working directly with large, corporate investors. More recently, my work raising capital for tax credit investments has included matching investors with historic real estate opportunities, traditional tax equity for renewable energy projects, and sourcing tailored transferable tax credit deals. Tax credit investing is growing rapidly compared to my early days in this space when the big…
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Foss & Company is comprised of a group of experienced tax credit professionals, representing a depth of knowledge within their respective fields. In this blog series, we highlight different Foss & Company team members to shine a light on the diverse and dedicated people that help make us who we are. As a part of Acquisitions, John focuses primarily on sourcing federal and state historic rehabilitation tax credits in the Northeast for the various Foss Historic Funds. He has over 30 years of commercial real estate finance experience beginning his career as a commercial banker. John served as Managing Director in senior asset management roles at Related Capital Company/Chartermac, Madison Realty Capital and Berkeley Point Capital. Most recently, John was a Senior Vice President of Originations at Stratford Capital Group in Boston where he focused on originating Low Income Housing Tax Credit transactions for various corporate investors. He received his BA in Economics from Syracuse University and works out of our Boston, MA office. To learn more about John, read our latest Spotlight blog series installment: How did you get started in the tax credit investing industry? In the mid-1990s I was asked to get involved in the formation of a Fund sponsored by the New Hampshire and Maine housing authorities designed to promote investment in smaller LIHTC transactions. Later, my business as a commercial banker focused on the LIHTC space. When did you join Foss & Company and what interested you about the company? I came to Foss & Company in August of 2019. Foss & Company’s extensive bench of established investor clients and the demand for historic tax credit investments in New England, New York and Pennsylvania represented a very attractive opportunity. What originally interested you about the Historic Preservation industry? Historic preservation transactions have tremendous potential…
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Transferable Tax Credit Due Diligence Checklist Summary Published May 28, 2024 – The Inflation Reduction Act (IRA) has brought significant changes to the landscape of renewable energy, including the introduction of transferable tax credits. Transferable tax credits have become a popular financial tool that allows businesses to reduce tax liabilities by investing in the growing market of renewable energy. As the transferable market continues to grow, it is imperative to stay informed and execute careful planning and due diligence. To prepare for a transferable tax credit transaction, a due diligence checklist needs to be put into place. Establishing a checklist not only provides a list of standard deliverables, but it allows stakeholders to focus on strategy, structure and deal execution. Foss & Company’s Partner & Managing Director, Bryen Alperin, was able to collaborate with Norton Rose Fulbright’s Partner, David Burton, Aon’s Global Co-Ceo of M&A and Transaction Solutions, Gary Blitz, and Winthrop & Weinstine Associate, Amber Peterson to publish a due diligence checklist sample stemming around the transfer of tax credits. This expert team developed a due diligence checklist that will show how the scope can vary depending on the complexity and type of credit transfer. To explore the potential of transferable tax credits, investors and developers need a trusted and innovative partner. Partnering with Foss & Company will offer innovative solutions that empower developers and investors to maximize the value of tax credits while driving positive impact in communities across the nation. Reach out to our team today to learn how our commitment ensures your projects not only succeed financially but leave a lasting legacy. To dive into the transferable tax credit due diligence checklist, download our white paper today!
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Renewable Energy Tax Credits Carryback: Know Your Tax Filing Options By: Bryen Alperin, Partner and Managing Director of Renewable Energy & Sustainable Technologies, Foss & Company | Published May 15, 2024 Leveraging Tax Credit Rollbacks Efficiently For corporations aiming to maximize benefits from renewable energy tax credits, taking advantage of the rollback option for these tax credits can be attractive. Typically, these credits can be rolled back up to three years to offset up to 75% of prior tax liabilities. There are two tax filing options for effectuating the rollback, and each has its advantages and disadvantages. This blog post will lay out the two options and discuss the key differences at a high level. Option 1: Form 1120-X, Amended U.S. Corporation Income Tax Return Purpose: Form 1120-X is used to correct a previously filed Form 1120 or 1120-A or to make certain elections after the prescribed deadline. Time Frame: Generally, a corporation must file Form 1120-X within three years after the date the original return was filed, or within two years from the time the tax was paid, whichever is later. Authority to Examine: The IRS has the authority to examine Form 1120X prior to the issuance of a refund. This may include conducting an audit if necessary. Processing Time: The processing time can be longer for Form 1120-X than for Form 1139 because it is not subject to the expedited 90-day review process that applies to Form 1139. Finality: The refund issued due to an amended return filed using Form 1120-X is not considered tentative, and the IRS’s acceptance of the amended return generally closes the matter unless later found to be erroneous. Option 2: Form 1139, Corporation Application for Tentative Refund Purpose: Form 1139 is used to apply for a quick refund of taxes due to certain…
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Utilizing the Quick Refund to Optimize Transferable Tax Credit Yields By: Bryen Alperin, Partner and Managing Director of Renewable Energy & Sustainable Technologies, Foss & Company | Published May 8, 2024 Corporations seeking to purchase 2023 transferable tax credits in 2024 may be concerned that their realization of the benefits will be delayed until they file their extended tax returns and receive a refund from the IRS. If they are forced to pay up front for those tax credits, then wait months to realize the benefits, it could dilute their financial return. In these cases, investors may be able to utilize the “quick refund” mechanism provided by the Internal Revenue Service (IRS) through Form 4466 to accelerate the receipt of benefits, thus improving their financial returns. This form allows corporations to apply for a quick refund of overpayment of estimated tax. The process is designed to expedite the refund of overpayments to corporations, ensuring they can realize the benefits of their tax credits or overpayments in a timely manner. Eligibility and Conditions To be eligible for a quick refund using Form 4466, a corporation must meet the following conditions: – The overpayment must be at least 10% of the expected tax liability for the year. – The overpayment must be at least $500. – The corporation applies for the quick refund after the end of its tax year but before it files its income tax return for that year. Process and Timeline The process for filing Form 4466 involves the corporation estimating its tax liability for the year and determining the amount of overpayment. The form must be filed after the end of the corporation’s tax year and before the corporation files its income tax return. The IRS is required to act on the application within 45 days from the…
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Foss & Company is comprised of a group of experienced tax credit professionals, representing a depth of knowledge within their respective fields. In this blog series, we highlight different Foss & Company team members to shine a light on the diverse and dedicated people that help make us who we are. As the Vice President of Renewable Energy Investment Operations on the Renewable Energy and Sustainable Technologies team, Annie Amrhein is focused on facilitating and managing all closing aspects related to the financing of solar and carbon capture investments. Prior to joining Foss & Company, she worked as a paralegal in commercial real estate where she supported attorneys in the acquisition, construction, and refinancing of multifamily housing and healthcare facilities. Annie graduated from the University of Virginia with a BA in Environmental Science and completed her Master of Public Administration with a specialization in Energy, Technology, and Climate Policy from University College London. To learn more about Annie, read our latest Spotlight blog series installment: How did you get started in the tax credit investing industry? My first exposure to tax credit investing was during my first day working for at Foss & Company. Prior to joining the renewables team, I had worked in the legal space where I was exposed to real estate and financial services management with my academic background rooted in environmental science and policy. This role at Foss has provided me with an opportunity to not only apply my professional and educational skillsets, but also expose me to an entirely new industry of tax credits, project finance and investment management. It has been extremely interesting to learn about renewable energy financing as this wasn’t necessarily a component highlighted in my academic courses, so I’ve been able to broaden my knowledge base in an unexpected, yet…
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The Texas Hailstorm: A Catalyst for Change in the Solar Industry By: Bryen Alperin, Partner and Managing Director of Renewable Energy & Sustainable Technologies, Foss & Company In the wake of the recent Texas hailstorm, which inflicted considerable damage on a 350-MW solar farm, stakeholders across the renewable energy spectrum are reevaluating the implications of hail risk for future projects. Foss & Company is still excited to invest in regions such as Texas, and believes these transactions can be low risk if structured appropriately. This event has not only highlighted the need for investors to structure around extreme weather risks, but has also sparked a broader conversation about resilience, insurance, and innovation within the renewables industry. This blog will outline some of our initial takeaways and recommendations. Strategic Recommendations for Investors The recent hailstorm event in Texas serves as a critical lesson for investors in the renewable energy sector, particularly those involved with solar projects. To mitigate risks and safeguard investments against similar incidents in the future, we offer the following specific recommendations: Mandate Hail Stow Protocols: Investors should consider requiring solar projects in their portfolios to operationalize hail stow protocols. These protocols are essential measures designed to protect solar panels during severe weather events, thereby minimizing potential damage and associated losses. Ensuring that these practices are not only in place but also rigorously adhered to, is a crucial step in enhancing the resilience of solar investments. Closely Manage Insurance Coverage: A comprehensive risk management strategy should include a well-structured insurance portfolio that combines natural catastrophe insurance and tax insurance. Investors should do ongoing compliance monitoring to ensure that insurance policies are renewed, and coverage does not lapse. Furthermore, investors should understand exceptions to their coverage, and ideally have a strong sponsor guaranty that covers any gaps. Incorporate Rebuild Covenants: Tax investors should…
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Foss & Company is comprised of a group of experienced tax credit professionals, representing a depth of knowledge within their respective fields. In this blog series, we highlight different Foss & Company team members to shine a light on the diverse and dedicated people that help make us who we are. As Associate Vice President of Investments for Renewable Energy and Sustainable Technologies, Ms. Hua manages the closing and diligence process for renewable energy and sustainability funds and participates in the screening of potential new investments. Prior to joining Foss & Company, Ms. Hua worked in Business Development and led utility-scale solar and battery originations. Her experience includes corporate development and risk management roles at The Williams Companies. Ms. Hua holds an MBA from The University of Tulsa and a BBA from The University of Oklahoma. She is based out of our Denver office. To learn more about Jennifer, read our latest Spotlight blog series installment: How did you get started in the tax credit investing industry? I was first introduced to tax credit investing during my tenure at The Williams Companies, where I held various roles over seven years. During my time in Corporate Development, I built dynamic models for capital projects covering solar, battery and natural gas. Williams was not a corporate taxpayer at the time, requiring us to explore alternative routes to monetize Investment Tax Credits. This experience provided me with key knowledge in tax credit structures. The knowledge and expertise I gained from this exercise has been invaluable in my contributions at Foss & Company. When did you join Foss & Company and what interested you about the company? I joined Foss & Company in August of 2023 and was drawn to the organization’s rapid-paced environment and talented professionals. The tax credit industry is ever evolving,…
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Strategic Moves: Navigating Transferability-Flips for Institutional Investors In the ever-evolving realm of institutional investment, savvy investors are turning their attention to innovative strategies to enhance portfolio returns. As the transferability market gains momentum, institutional investors are strategically leveraging Transferability Flip Transactions, or “t-flips,” to unlock latent value in their tax equity investments. In this landscape, partnering with a seasoned fund sponsor, such as Foss & Company, becomes not just a choice but a strategic imperative. The Institutional Advantage in the Transferability Market: Institutional investors are well-positioned to capitalize on the increasing activity in the transferability market. As regulatory landscapes shift and market dynamics evolve, institutions can leverage their scale and expertise to navigate the complexities of t-flips for optimal portfolio performance. Investors interested in making equity investments may enhance their after-tax returns by utilizing the t-flip structure to invest in renewable energy and sustainable technology projects. Investors interested in buying tax credits on a transferable basis can may find that a t-flip structure offers risk mitigation benefits when compared to a “direct purchase” of tax credits. Understanding T-Flips: A Transferability Flip Transaction is similar to the Partnership Flip structure that the industry has used for billions of dollars of transactions, but instead of having the tax credits allocated based on ownership in the project, the tax credits are transferred to a third-party buyer. There is still a tax equity partnership at the project level which can monetize the depreciation benefits of the project and establish a “step up” in the tax credit eligible cost basis to a fair market value. Working with Experts: Institutional investors and tax credit buyers seeking to capitalize on the transferability market’s potential are wise to align with a reputable fund sponsor like Foss & Company. Foss & Company, with its proven track record, not only…
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By: Dawn Lima, Vice President of Renewable Energy & Sustainable Technologies, Foss & Company Shades of Gray, Blue, Green – Why do we need a color wheel to describe hydrogen and what do the colors mean? If you have been following the headlines and reading recent articles about the future of energy, you’ve likely read about hydrogen and the many colors used to describe it. Green, blue, gray, yellow, pink, etc. Why does a naturally colorless gas have so many colors? Hydrogen is a very promising energy source in a decarbonized future as it does not emit carbon dioxide (CO2) when burned. Hydrogen energy could have many uses, particularly to decarbonize heavy vehicle transportation and construction. What these Colors Mean So, why are there so many colors to describe hydrogen? The different colors of hydrogen refer to how the hydrogen is made: mainly the source of the hydrogen molecule and the source of the power used to generate the hydrogen. The most common colors include gray, blue and green. Gray Hydrogen: About 80% of hydrogen produced is currently gray. To make gray hydrogen, natural gas is burnt in a process called steam methane reform (SMR) and carbon dioxide is released into the atmosphere, not captured and sequestered. The power to generate the hydrogen is typically the local grid (not necessarily renewable energy) so the source mix will depend on the location of the plant and now decarbonized the grid in the region is. Blue Hydrogen: Around 1% of hydrogen produced. Blue hydrogen is slightly less environmentally harmful than gray. Blue is produced in the same way as gray, but the carbon dioxide is captured and sequestered, not released into the atmosphere. The power to generate the hydrogen is typically the local grid (not necessarily renewable energy). Green Hydrogen: Green…
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Preserving the Past: Unpacking Historic Tax Credits Historic preservation goes beyond the architectural beauty of a building. It is an important way to transmit the understandings of the past to future generations and preservation of the history helps tell these stories. The federal government realized the importance of these historic sites and implemented the Federal Historic Preservation Tax Incentives program that will encourage private sector investment in the rehabilitation and re-use of historic buildings. At a state-level, 37 states have adopted the state historic tax credit program and are transforming underutilized historic buildings to create more inclusive and resilient communities. What are Historic Tax Credits? Historic Tax Credits (HTC) are a federal tax credit program that provides investors with a 20% credit against the costs of rehabilitating eligible historic structures. This program was established in 1978 and has facilitated the rehabilitation of over 42,000 certified historic buildings. Administered through the National Park Service, Internal Revenue Service (IRS) and State Historic Preservation Offices, it has created over thousands of jobs and turned out to be the nation’s most successful and cost-effective community revitalization program. At the state-level, Historic Tax Credits complement the federal program by providing additional incentives, leading to even greater financial benefit for property owners. 70% of states have adopted some form of historic tax credit incentive to support building reuse and the preservation policy. What Does This Mean for Property Owners, Developers and Investors? Let’s take a look at HTCs on a federal level. Property owners can claim tax credits for up to 20% of qualified rehab expenses and this can offset the cost of rehabilitation to make projects financially viable for owners. As for developers, HTCs will incentivize developers to renovate, restore, and reconstruct the historic buildings. No other tax credit provides as much incentive to preserve…
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Foss & Company is comprised of a group of experienced tax credit professionals, representing a depth of knowledge within their respective fields. In this blog series, we highlight different Foss & Company team members to shine a light on the diverse and dedicated people that help make us who we are. As the Vice President of Renewable Energy Portfolio Management, Andrew is in charge of all aspects of investment performance, working with sponsors on project compliance and tax credit investors on fund management. Prior to joining Foss & Company, he created a solar investment vehicle and managed its day-to-day operations. For 12 years prior to that he worked with top-tier solar or renewable energy companies, either financing assets or developing premier asset and portfolio management talent and processes globally. He has overseen some of the largest solar and wind farms in North America, as well as solar sites in Chile, Italy, Spain, England, and Canada. His education credentials include an MBA from ESADE in Barcelona, and a BA from UC Santa Barbara. To learn more about Andrew, read our latest Spotlight blog series installment: How did you get started in the tax credit investing industry? In 2006, while working on Wall Street doing CleanTech sell side equity research, I came across an opportunity to develop a financing platform for a residential solar company in San Luis Obispo (SLO), CA. I packed up my Prius and drove from Manhattan to SLO, excited for the new opportunity to help a growing company focused on solar. We had some success developing and implementing home equity loans for solar and the team sold the first SunRun PPA deal, which was effectively a tax equity investment. From there I joined a structured finance desk with a solar developer raising tax equity in 2008. I haven’t…
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By: Dawn Lima, Vice President of Renewable Energy & Sustainable Technology, Foss & Company I recently attended the Carbon Capture, Utilization and Sequestration (CCUS) Summit in League City, TX, and the Carbon Capture Coalition’s Annual Meeting in Denver, CO. These events were very successful as well as insightful and I left feeling energized and motivated. It’s always enjoyable to be surrounded by like-minded professionals while making many new connections. I wanted to share some key takeaways from both events. Capture the CO2: CCUS Summit I was very impressed with the active participation from stakeholders across the CCUS industry. There is incredible excitement around CCUS right now, fueled in part by the passing of the Inflation Reduction Act (IRA) in 2022, but mainly due to a motivation to decarbonize our energy sector and achieve climate goals. During the CCUS Summit, we had participants join all the way from Canada, Asia, Europe and South America. The US’ carrot versus stick approach to incentivizing investments through tax credits has certainly captured the attention of other nations and companies. This is evident as we have seen an increase in investment in US-based projects to capitalize on the US tax credit incentives. What was clear during this event is that innovation and collaboration is critical to reaching our climate and net-zero goals. What Are My Thoughts? As we sat down with industry leaders, during our discussions there were some interesting questions that had come up, include: Is the CCUS industry innovating equally in both important areas? Does the 45Q tax credit incentivize both sequestration and utilization equally? Are we – as a CCUS industry – working on CCU projects as well as CCS projects? The short answer? No. In its current form, the 45Q tax credit does not incentivize CCU equally compared to enhanced oil…
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By: Bryen Alperin, Partner and Managing Director of Renewable Energy & Sustainable Technologies, Foss & Company The U.S. Treasury Department and IRS have recently announced the release of proposed regulations (REG-132569-23) for publication in the Federal Register. These regulations are set to amend the existing rules under section 48, incorporating modifications from the Inflation Reduction Act of 2022 (IRA), previous legislative changes, and various administrative guidelines. The Notice of Proposed Rulemaking (NPRM) extends over 127 pages and aims to provide both clarifications and updates concerning the energy tax credit. Initial Foss Takeaways: Key Points for Investors Uncertainty for Biogas Equipment: In a surprising outcome, the proposed rules indicate that “gas upgrading equipment necessary to concentrate the gas into the appropriate mixture for injection into a pipeline through removal of other gases such as carbon dioxide, nitrogen, or oxygen is not included in qualified biogas property”. However, it emphasizes the eligibility of costs associated with essential components of biogas projects, such as equipment for cleaning and conditioning the gas. This has caused confusion and uncertainty in the RNG industry, as many projects feature equipment that both cleans and concentrates the gas. The implication of the proposed rules is that investors will need to do a detailed review of the process flow diagrams and determine which costs are associated with equipment which cleans or conditions gas versus equipment that concentrates gas. Depending on the determination, large portions of existing RNG projects may not qualify for the ITCs they thought they would. The industry will be lobbying to have this definition changed, or further clarified. New “Placed in Service” Criteria: The NPRM proposes a new definition of “placed in service” for Section 48, replacing long-relied-on Section 46 regulations. The definition is as expected and states that projects generating tax credits are considered…
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Did you know the key to a sustainable future lies within Renewable Energy Credits (RECs), corporate savings and tax equity investments? The dynamic synergy between these three showcase how corporations can strategically leverage tax equity to not only address their tax liabilities but also advance their commitment to sustainability. What are Renewable Energy Credits? With the federal government taking strong action on climate change, corporations are analyzing their carbon footprint and realizing that investing in Renewable Energy Credit (RECs) agreements and tax equity transactions can lead to being more environmentally responsible while helping improve their bottom line. Now, not all renewable energy sources come strictly from energy systems like solar panels or wind turbines. RECs are created as long as one megawatt-hour (MWh) of electricity is generated from a renewable energy source and delivered to an electric grid. Once it’s generated, corporate customers are able to purchase RECs, therefore allowing the use of renewable energy without installing renewable energy systems. How do Tax Equity Investments Tie In? Tax equity investments help fund viable renewable energy projects by enticing investors with a combination of tax savings and cash returns. As for developers, it provides a way to get new projects off the ground. Tax credits are government subsidies for projects like renewable energy, but many developers lack the tax liability to fully use them. That’s where tax credit investments come in. Companies with large tax liabilities can invest and receive tax credits, depreciation benefits and cash flows. RECs bolster the renewable energy market and are a cost-effective, environmentally friendly and decentralized method of carbon reduction. What Role Do RECs Play in the Tax Equity Market? RECs and REC markets play a key role in driving new renewable energy deployment and projects by guaranteeing an income stream for new…
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Foss & Company is comprised of a group of experienced professionals, representing the best in class within their respective fields. In this blog series, we highlight different Foss & Company team members to shine a light on the diverse and dedicated people that help make us who we are. Michael joined Foss & Company in April 2023. As Vice President of Investments, he works with institutional investors and large corporations to direct capital that is set aside for federal and state taxes into high-impact, tax credit-generating projects with a focus on renewable energy and carbon capture. Prior to joining Foss & Company, Michael spent 10 years developing an all-electric, zero emission freight transportation system. During this time, he expanded the company into three new markets, sourced over a billion dollars of debt and equity capital, and garnered offtake agreements with Fortune 500 companies throughout the United States. Michael graduated from Texas A&M University with a B.S. in Aerospace Engineering and M.Eng. in Industrial and Systems Engineering. Get to know Michael in the latest Spotlight Series Blog: How did you get started in the tax credit investing industry? Originally, I came from an entrepreneurial background in supply chain and logistics. As an engineer, I spent years developing a new freight transportation system and I then started working to commercialize the technology, so I saw firsthand how much effort went into getting large infrastructure projects financed. Since then, I wanted to move more directly into finance. I was excited at the opportunity to join Foss & Company in a role that allows me to help bring meaningful projects to completion while adding value to the corporations investing in them. When did you join Foss & Company and what interested you about the company? I joined Foss & Company in April 2023 in…
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Repost of the original article in the Novogradac Journal of Tax Credits, which can be found here. As the renewable energy market continues to grow, the popularity of transferable tax credits as a way to fund projects and reduce corporate tax liabilities is on the rise. Following the passage of the Inflation Reduction Act, provisions enabling the transfer of tax credits have become hot topics for both developers and investors. In this article, we’ll discuss several common misconceptions regarding transferable tax credit transactions. Transferable Tax Credits Overview Transferable tax credits are a valuable financial instrument that allows businesses to reduce their tax liabilities by investing in projects that generate economic, social or environmental benefits. These tax credits can be sold or transferred between taxpayers, enabling companies with little or no tax liability to monetize the credits and create a new revenue stream. As attractive as this financial tool may seem, it’s essential to understand the associated risks. Myth #1: Transferable Tax Credit Buyers Have No Risk When speaking to project developers or prospective investors, we often hear transferable tax credits compared to state certificated tax credits which have almost no risk associated with them. Unfortunately, there are some risks associated with transferable tax credit transactions and it is important for investors to understand those risks. The risks associated vary across the different types of tax credits eligible for transferability. For example, clean energy investment tax credits (ITCs) are subject to recapture risk for five years following the project being placed in service. Carbon sequestration tax credits are subject to a three-year recapture period and the triggering events for recapture are quite different. Clean energy production tax credits (PTCs) are not subject to recapture, but do face volume risks which could lead to under delivery of tax credits in some years.…
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