The American Wind Energy Association’s (AWEA) annual conference, WindPower, was held in Anaheim, California. Below are soundbites from panel discussions on May 24, 2017. The soundbites were prepared without the benefit of a transcript or recording and were edited for clarity. Further, they are organized by topic, rather than appearing in the order in which they were said.

Each year WindPower seems to devote less space on its schedule to topics related to tax equity. This year there was only one panel that purported to address tax equity; it was a panel about tax reform.  It also appeared that there were fewer conference attendees who work in the tax equity space.

Tax Reform

“There’s lots of tax equity in the market today. Deals are getting done regardless of uncertainty [with respect to tax reform].” Managing Director of a Money Center Bank

“There’s so much tax equity capacity right now that should there be tax reform [with a reduction in the corporate tax rate] there should [still] be enough tax equity out there.” Managing Director of a Money Center Bank

“A lot of people are handicapping [tax reform] as rate reduction that is less severe than what’s in [any of the Republican] proposals.” Managing Director of a Money Center Bank

“Tax reform will have a negative net present value impact on projects’ economics. To maintain the same return level, sponsors will need to drive down costs or increase revenue. Revenues have been going down, but costs have been going down faster. If we can keep that up, [the wind industry] may be able to absorb the cost of a change in the corporate tax rate. Managing Director of a Money Center Bank

“The cost of tax law change will not be as high as some people have projected.” Managing Director of a Money Center Bank

“Our intelligence shows support [on Capitol Hill] for maintaining the PTC phase-out as it is today, but we don’t take that for granted.” SVP Federal Legislative Affairs of AWEA

“The general consensus among tax equity investors and sponsors is [any tax reform would include] minimal change to depreciation benefits and no change to the PTC phase-out.” Managing Director of a Money Center Bank

“For now, people are making [tax reform assumptions in financial models] and getting deals done, but that could change with more tax reform proposals. What the market wants is certainty.” Managing Director of a Money Center Bank

“How the transition period [for tax reform] is shaped can be very critical.” SVP for Federal Legislative Affairs of AWEA

“We’ve seen a couple of deals get hung-up around tax equity” due to tax reform concerns. Executive of a Construction Company [Not sure what deals this panelist was referring to. Possibly, they were deals in Oklahoma that suffered due to Oklahoma repealing its state production tax credit.]

“I haven’t see any deals die as a result of concern over tax law change, but I have seen structuring changes.” Managing Director of a Money Center Bank

Tax Equity Structuring in Light of the Risk of Tax Reform

“The way the markets are acting and the way [tax equity] deals are getting structured suggests there will be a tax rate change next year.” Managing Director of a Money Center Bank

“Most developers we are dealing with now ask us to factor in a lower tax rate in [the financial model] now, and if it does not happen, to fund more later on. So the sponsors are coming up with the capital to fill that reduced funding in tax equity.” Managing Director of a Money Center Bank

“The way the markets are acting and the way [tax equity] deals are getting structured suggests there will be a tax rate change next year.” Managing Director of a Money Center Bank

Bonus Depreciation

Due to concerns of a decline in the corporate tax rate, “most of us are electing to take bonus depreciation. That’s an important change that been going on across the market fairly broadly.” Managing Director of a Money Center Bank

The Production Tax Credit (PTC)

“We used to have a one or two year PTC horizon; now, we have a long-term PTC horizon.” President of the US Division of a Wind Turbine Manufacturer

M&A Market for Projects

“The market for good projects is a seller’s market. Buyers have been taking change in tax law risk. Seeing some push back from buyers asking sellers to take the risk that the buyer raises less tax equity than the buyer projected in calculating its purchase price due to tax reform.” Managing Director of a Money Center Bank

Wind Competing with Natural Gas

“Wind gets a bad rap that it is crashing capacity. There is a lot of capacity out there. The causes of the surplus capacity are the great recession, low natural gas prices and some of the distortions that renewables cause.” Chair of a Midwest Utility

“Everyone talks about natural gas being cheap, but have you ever bought natural gas when a pipeline is curtailed? It is very expensive.” Global Procurement Manager of a Fortune 100 Manufacturer

“You can’t build gas plants at the scale we need for the areas [for which]we hope to have load growth, so wind is not going anywhere.” Executive of an Independent Power Producer

Economics of Wind as Power Source

“Wind is the clean energy solution with reliability.” Senior Director of a California Utility

“Wind is a fuel that is saving us money.” Chair of a Midwest Utility

“Across eight states, 35% of our capacity comes from wind. Reliability is not a problem. I would not have thought that five to ten years ago.” Chair of a Midwest Utility
Using wind “we can deeply reduce carbon emissions without sacrificing affordability or reliability.” President of the US Division of a Turbine Manufacturer

“We have started to re-define base load capacity.” President of the US Division of a Wind Turbine Manufacturer

“Wind power is the number one source of renewable energy in this country. It surpassed hydro last year.” AWEA’s CEO

“In five to ten years, wind turbines will be more individualized and more customized.” President of the US Division of a Wind Turbine Manufacturer

Energy Policy

An “all of the above energy policy should mean the least costly” [energy sources are selected]. President of the US Division of a Wind Turbine Manufacturer

“In California, we have over 5,000 MW of behind the meter generation.” Senior Director of a California Utility

“Ninety percent of renewable energy is generated in rural areas. We have a transmission challenge to get it where it is needed. You really don’t need technology advances for that. You need creative folks to get together and come up with a policy solution.” Executive of an Independent Power Producer  Storage

“Storage plays a really critical role with renewables. What is going to drive the most value out of storage is less about chemistry and more about digital controls.” Executive of an Independent Power Producer

Related Capabilities

Practices –