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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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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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As the world races towards a sustainable future, the need for clean and renewable energy sources becomes increasingly vital. In this journey, biogas, bioenergy and renewable natural gas (RNG) are emerging as frontrunners, offering a promising solution to our energy demands. However, the path to widespread adoption requires support from various stakeholders, including tax equity investors. In this blog, we delve into the crucial role of tax equity in accelerating the energy transition and driving the advancement of biofuels. A Vision for the Future As we approach 2030, the energy transition takes center stage. Tax equity and tax credits have become instrumental in driving this transition by incentivizing investments in sustainable energy projects such as solar, carbon capture, electric vehicles (EV) and more. The involvement of tax equity investors is vital in providing financial support to biofuel developers, propelling the growth of biogas, bioenergy, and RNG projects. By channeling their investments strategically, tax equity investors play a pivotal role in shaping a greener and more sustainable future. Unveiling the Potential Biogas, biofuels, bioenergy, and RNG represent the pinnacle of sustainable energy solutions. Biogas is produced from organic waste and serves as a clean source of fuel. Biofuels are derived from renewable organic materials, providing a greener alternative to traditional fossil fuels. These fuels can be seamlessly integrated into existing infrastructure and engine technology, making them readily accessible for widespread adoption. In the quest for a sustainable future, these bio-based energy sources hold tremendous promise. Not only are biofuels compatible with existing infrastructure and engine technology, but they also offer near-to-long-term solutions that have a critical role to play. Tax equity investors facilitate the development of biofuel projects by providing the necessary funding and expertise. Their involvement enables biofuel developers to realize their visions, thereby accelerating the transition towards a sustainable…
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Foss & Company is comprised of a group of experienced tax credit professionals, representing a great 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 Vice President of Renewable Energy and Sustainable Technologies, Dawn Lima manages all aspects of the transaction lifecycle for both solar and carbon capture utilization and sequestration (CCUS) investments, including the identification and development of new CCUS opportunities for Foss & Company. Ms. Lima has over two decades of experience in full cycle of oil & gas energy development, spanning operations, business development and acquisitions & divestitures. To learn more about Dawn, read out latest Spotlight blog series installment: How did you get involved in the tax credit industry? By chance or even fate! After over two decades working in the Oil & Gas industry developing fossil fuel energy I was approached by Foss & Company for a position on the Carbon Capture, Utilization & Sequestration (CCUS) team. I was interested in working on renewable energy projects and Foss offered a unique opportunity. I knew little about the tax credit industry at the time but was very intrigued by tax equity investments; corporations can convert a tax liability to an attractive investment that also has a positive social impact! Tax credits and tax equity investing rings many bells: Investment versus liability, reduces the corporate tax rate, ESG project and positive social impact! What originally interested you about carbon capture and the renewable energy/sustainability industry? I have over 20 years of experience in Oil & Gas and had the opportunity to work both domestically and internationally on a variety of upstream development projects. I chose to pivot and work…
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Foss & Company is comprised of a group of experienced professionals, representing a great 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. With 16 years of experience in financial services, Adam Rutherford specializes in directing investment capital towards impactful projects like renewable energy, carbon capture, and real estate, in collaboration with institutional investors and corporations. His previous roles include serving as a Financial Education Consultant and Investment Analyst at J.P. Morgan. At Empower, he demonstrated excellence in institutional sales for Fortune 500 companies and skillfully managed corporate and nonprofit relationships while overseeing Advisory Services solutions. Adam holds a B.A. in Business Administration with a focus on Finance and Real Estate from the University of Missouri – Columbia, and he obtained an MBA from Columbia University in New York. Learn more about Adam in our latest Spotlight Series: How did you get started in the tax credit investing industry? I was in the financial services industry at the same firm (through a merger) for 16 years before I got a call about an opportunity with Foss & Company, I loved what I was doing and the people I worked with. Only something as interesting and impactful as what we do at Foss & Company could have prompted a change. I was hooked on the value proposition and the clear positive impact of the investments we take part in. When did you join Foss & Company and what interested you about the company? I joined in 2022 to support clients in the Northwest (AK, WA, OR, ID, MT, WY and the Northern half of CA). The dynamic at Foss & Company is very…
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By Bryen Alperin, Managing Director The Inflation Reduction Act (IRA) brought significant changes to the landscape of renewable energy tax credits by introducing the option of transferability. This provision allows taxpayers to transfer their renewable energy tax credits to non-related parties, creating a new avenue for accessing the benefits of clean energy investments. The IRA’s transferability provision has the potential to enhance liquidity in the renewable energy sector, attract more private capital, and accelerate the transition to a sustainable future. The IRS has now issued highly anticipated proposed regulations for the transfer of certain Federal income tax credits under Section 6418. These regulations provide much needed guidance to taxpayers who intend to make an election to transfer eligible credits as well as transferee taxpayers as to the treatment of transferred eligible credits. Clearer Guidelines for Tax Credit Transfer These proposed regulations would allow eligible taxpayers to transfer any specified portion of an eligible credit determined with respect to any eligible credit property to a transferee taxpayer in accordance with Section 6418 of the Code and §§1.6418-1 through 1.6418-5. The regulations also provide definitions for terms used throughout the section 6418 regulations, including that of an eligible taxpayer. Along with needed definitions, the time and manner to make a transfer election, and information about the pre-filing registration process, among other items have also been outlined in the proposed regulations. The Treasury Department and the IRS intend and expect that providing taxpayers with guidance that allows them to effectively use section 6418 to transfer eligible credits will beneficially impact various industries, deliver benefits across the economy, and reduce economy-wide greenhouse gas emissions. Based on the proposed regulations, eligible taxpayers are also required to provide certain required minimum documentation to the transferee taxpayer, and the transferee taxpayer is required to retain…
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By Bryen Alperin, Managing Director This blog is the second in a series that will explore the opportunities in the transferability of renewable tax credits for investing in renewable energy and reducing tax liability. The Inflation Reduction Act, signed into law on August 16, 2022, has created new opportunities to invest in a sustainable future. There are many options, but one of the more promising is new transfer provisions which allow for the transfer of renewable energy tax credits between taxpayers. With these new transfer provisions, a taxpayer can purchase a tax credit generated from an eligible project, for example, at $0.90 per $1 of tax credit and then apply the credit to reduce required tax payments to the IRS by the full $1. We know enough about transferability to be certain that this added feature in the Internal Revenue Code will allow for a meaningful new avenue to access tax credits from renewable energy projects, and we expect these changes to expand the population of taxpayers that participate in the renewable tax credit market. The industry anxiously awaits guidance from the IRS on the intricacies of transferability, and when that guidance will be delivered is still uncertain. However, we do have solid visibility into what participants can expect, including that: Taxpayers can elect to transfer all or a portion of their tax credits to a non-related transferee. Payment for credits must be in cash. The tax credit amount will not be included in taxable income, nor deductible. There are no caps or phase outs (unlike direct pay). Election must be made no later than the due date (including extensions) for the respective tax return, and is irrevocable. Transferees cannot re-transfer the credits. If the tax credit is generated by a partnership, the partnership needs to make the election. Transferability…
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By Bryen Alperin, Managing Director This blog is the first in a series that will explore the opportunities in the transferability of renewable tax credits for investing in renewable energy and reducing tax liability. The Inflation Reduction Act, signed into law on August 16, 2022, has created new opportunities to invest in a sustainable future. There are many options, but one of the more promising is new transfer provisions which allow for the transfer of renewable energy tax credits between taxpayers. With these new transfer provisions, a taxpayer can purchase a tax credit generated from an eligible project, for example, at $0.90 per $1 of tax credit and then apply the credit to reduce required tax payments to the IRS by the full $1. Transferable credits allow taxpayers to access credits free of ongoing ownership interests and related accounting effort. Tax credit investing isn’t new, but some investors prefer not to account for a longer-term investment to access them. The purchase of transferred tax credits may be the solution. These tax credits can also offer benefits to the renewable energy projects themselves. By allowing credits to be transferred, it opens the pool of potential investors and can increase the amount of funding available for these types of projects. This can help to accelerate the transition to renewable energy and contribute to the goal of reducing carbon emissions. The ability to transfer renewable energy tax credits provides flexibility. For example, a company that has a high tax liability in a particular year may not have the ability to fully utilize all the credits that it generates. By being able to transfer those credits to another taxpayer, the company can still receive some value for the credits and the other taxpayer can use them to offset their own tax liability. The eligibility…
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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. Drew Goldman, Vice President of Investments for Foss & Company, spent 18 years in financial services and held roles including equity syndication, strategic M&A, global investment banking, corporate lending, and commercial real estate before joining Foss & Company in 2019. Drew has an MBA from Emory University’s Goizueta Business School and earned his BBA from The University of Texas at Austin. Get to know Drew in the latest Spotlight Series blog: How did you get started in the tax credit investing industry? After working in the corporate finance and investment banking industries, I moved “back home” to Atlanta in 2005 and found myself in charge of business development for an apartment management company; a large portion of the third-party units were in the Low-Income Housing sector, so I learned a lot about tax credits by absorption. With 2008 – and the “Great Recession” an opportunity to raise capital for a large LIHTC syndicator presented itself. I then transitioned into tax equity. Since then, I have migrated from Housing into Renewable Energy and Historic Preservation. When did you join Foss & Company and what interested you about the company? I joined Foss in January 2019 with a growing interest in financing Renewable Energy and other Sustainability-focused initiatives. Foss has a highly entrepreneurial culture, and a flexible approach to our evolving marketplace. What do you find important or interesting about tax credits? I have been in financial services since the 1990s – tax credit equity is well-proven for mobilizing private sector capital into…
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Carbon Capture, Utilization and Sequestration (CCUS) is the process of capturing carbon oxide (can be either carbon monoxide or carbon dioxide, but most commonly we speak of carbon dioxide or CO2) from emission sources for the purpose of preventing it from reaching the atmosphere, which would amplify greenhouse heating. Typically, the CO2 is permanently stored deep underground, but it can also be utilized in other ways, so long as the CO2 never reaches the atmosphere. CCUS and the related 45Q tax credit provides a unique opportunity for tax equity investors to invest in an Environmental, Societal, and Governance (ESG) friendly tax credit. The process of CCUS typically involves the following steps: Locate a predictable and constant source of carbon dioxide emissions: Most combustion processes create CO2, a few examples are coal/natural gas plants, power plants, and ethanol production. Capture the CO2: The process involved in capturing the CO2 depends on the concentration or purity levels of the source emissions. High purity emissions of CO2 (>95% by volume), such as the CO2 emitted from the biorefining of ethanol requires minimal, off-the-shelf-technology to separate out the CO2. Low purity emissions (<95% by volume), such as the CO2 emitted from a coal power plant require advanced technology and various chemical processes to separate out the CO2. Find storage site: A suitable storage site is required to permanently sequester the CO2. Currently, the most suitable sites may be a saline aquifer or in a depleted oil reservoir as is the case in enhanced oil recovery (EOR). Other means of permanent storage are being pursued, for example permanent sequestration in concrete during the manufacturing process. Transfer the CO2 to the sequestration site: In some instances, producers (emitters) of CO2 may be conveniently located on or near a suitable storage site. In all other instances, pipelines are used to transport the CO2 from the emitters to the…
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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. Tony was born and raised in the San Francisco Bay Area, earning his bachelor’s degree from UC Berkeley and his law and business degrees from Santa Clara University. After spending years as an attorney, he joined Foss & Company in 2017. As Director of Real Estate Investments & Portfolio Management, Tony oversees the underwriting and asset management of Foss Historic Tax Credit (HTC) investments, working closely with real estate developers, institutional investors, and industry partners. Get to know Tony in the latest Spotlight Series blog: What originally interested you about the historic rehabilitation industry? I have always been interested in real estate development, especially projects that have a meaningful impact on the community. I also like old buildings and historic architecture. I would much rather see a building repurposed than demolished. The rehabilitation of a building is an interesting process, and more challenging than new construction. In the end, a valuable resource is being conserved and enhanced, and that’s a great benefit for all. When did you join Foss & Company and what interested you about the company? I joined Foss in January 2017. I was looking for new opportunities and when I learned about Foss, I did a lot of research on the company and the tax credit industry. The more I learned, the more excited I was about joining the company. I wanted to be a part of financing historic rehabs by monetizing tax credits. It’s a great business, and it’s rewarding to be a part of the rehabilitation…
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Federal investment tax credits (ITCs) are government-endorsed, social-engineering tools designed to create a “partnership” between the government and the private sector, providing financial incentives to encourage corporations to deploy capital investments in areas that are considered important or strategic for the country. These areas include affordable housing, new market development, historic rehabilitation and renewable energy among many others. The government is simply not in the business of, or does not have the capacity to, properly assess the risk and evaluate these types of projects, so it turns to the private sector to lead the charge and recognize the opportunity presented the financial, social and environmental benefits of investment tax credits. All companies that are U.S. federal taxpayers should consider tax credit investing. Banks and insurance companies are the most common players to-date, and while corporations have become more active in recent years, tax investing overall remains underutilized. It is estimated that only a short list (less than 10%) of the qualified tax paying companies actively participate in the ~$20 billion annual tax credit market. This low participation rate has resulted in billions of “less than efficient” income tax payments to the U.S. government that could have otherwise generated value for companies, shareholders, and communities. Given the large number of mature, cash-flowing companies in the US seeking earnings enhancements, cash or tax management improvements and lower expense ratios, these are eye-opening statistics. So why are tax credits not more widely used by corporate America? While there may not be a clear-cut answer to this inquiry (or perhaps it is a combination of factors), here are some possible, common explanations: Too Good to be True – When companies first learn about tax credits, they think they are “too good to be true,” and that they must be some kind of scheme or…
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