Five Takeaways: Utility Acquisition of Renewable Projects – A Discussion of the Legal and Tax Issues Regarding Utilities, Developers and Tax Equity

Increasingly, utilities are replacing older generation fleets with more cost-effective generation technologies. Renewables are cost-competitive alternatives in this effort for a number of reasons, including the current tax incentives. A utility’s acquisition of a renewable asset presents many issues not otherwise present in a non-utility acquisition, particularly if the utility intends to include its investment in rate base.

In our webinar, we discussed the legal and tax issues associated with renewable energy transactions based on our experience representing both utilities and developers.


Below are key takeaways from this week’s webinar:

  1. 2021 will bring an increase for the renewable energy industry, despite the effect COVID-19 has had on the market.
  2. Some issues to consider when creating a tax equity structure that involves a utility are: regulatory investment limitations, related party and normalization considerations.
  3. Utility build-transfer agreements should be executed well in advance of the notice to proceed. These agreements usually involve classic mergers & acquisitions (M&A) representations and warranties that are made in advance of the project beginning.
  4. Developers under a build-transfer agreement should consider ways to mitigate risk.
  5. Timeline is important. A utility will commonly use the interim period between entering into a build-transfer agreement and closing the transaction, to complete tax equity documents and make certain representations and warranties to the tax equity investor.

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Access past webinars in this series.

Heather CooperHeather Cooper
  Heather Cooper works on federal income tax matters, with a focus on energy tax issues. She represents clients in restructurings, mergers and acquisitions, and other transactional energy related matters. Heather's national practice includes advising on all aspects of renewable energy transactions such as solar and wind projects. She provides advice on tax equity structures, refinancings, acquisitions and dispositions, restructurings and workouts. Read Heather Cooper's full bio.


Carl J. FlemingCarl J. Fleming
Carl J. Fleming focuses his practice on mergers and acquisitions, project development and project finance, predominately in the renewable energy industry. He leads energy, infrastructure and PPP transactions throughout the US and in more than 40 countries worldwide. Carl represents private equity investors, Fortune 500 companies, foreign governments, and a broad range of leading renewable energy developers and sponsors. Read Carl Fleming's full bio.


Christopher GladbachChristopher Gladbach
Christopher Gladbach counsels clients in energy M&A, project development, tax equity and project finance transactions. Chris works with energy clients in structuring complex equity and debt investments, advises both buyers and sellers in the power sector in mergers and acquisitions, and joint ventures, and on the development of large-scale energy projects. He assists his clients in mitigating and allocating risk associated with these transactions in conjunction with achieving their primary business and financial objectives. Read more.


Debra A. HarrisonDebra A. Harrison
  Debra A. Harrison advises publicly traded and privately held companies on general corporate matters and business-growth strategies. She represents clients throughout the corporate lifecycle, from transactions related to capital formation, mergers and acquisitions, joint ventures and strategic alliances, through brand extension programs, licensing of trademarks and other intangible assets, and the design and implementation of distribution channels and techniques. She has developed a concentration on renewable energy transactions, including the structuring, development and financing of solar photovoltaic projects in the United States and the European Union. Read Debra A. Harrison's full bio.


Joel A. HugenbergerJoel A. Hugenberger
  Joel A. Hugenberger advises clients on tax equity, project finance, acquisition finance and corporate finance transactions in the energy and infrastructure sectors with a particular emphasis on transactions relating to renewable energy and distributed generation. Joel represents tax equity investors, sponsors, developers, borrowers, lenders and arrangers in the financing of complex energy and infrastructure projects, domestically and internationally, and in the structuring and negotiation of various secured and unsecured loan facilities, joint ventures and tax equity investment structures. Read Joel A. Hugenberger's full bio.


Philip TinglePhilip Tingle
  Philip (Phil) Tingle represents energy companies such as utilities, independent power producers and financial institutions on a wide range of energy tax-related matters. He is the global head of the Firm's Energy Advisory Practice Group. Phil provides advice regarding all aspects of renewable-energy projects, including tax equity structures, refinancings, acquisitions and dispositions, restructurings and workouts. He has extensive experience with the production tax credit and with the application of renewable credits to new technologies. Moreover, he works with the investment tax credit for numerous kinds of solar projects. Read Philip Tingle's full bio.


Edward ZaelkeEdward Zaelke
Edward (Ed) Zaelke is the head of the Firm’s Global Energy Project Finance group. He focuses his practice on project finance and private equity in renewable energy transactional matters. With more than 30 years of experience, he advises clients on all elements of alternative energy development and finance, including equity and debt financing, merger and acquisition transactions, equipment purchase and sale agreements, power purchase agreements, siting and other real property issues, governmental approvals, and engineering, procurement and construction (EPC) contracts. Read Ed Zaelke's full bio.

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