11. Highlights from the Massachusetts Bankers Association’s “Banking on Solar Tax Equity and Financing Masterclass”
featuring Sunwealth and Sherin and Lodgen, LLP
By Darreck Mitchell, Director of Capital Markets
In the eleventh installment of our Banking on Solar series, we provide a quick recap of some of the topics covered at the Massachusetts Bankers Association’s Banking on Solar Tax Equity and Financing Masterclass in March 2021 To start at the beginning of the series, read Banking on Solar.
The Massachusetts Bankers Association, Boston law firm Sherin and Lodgen, and Sunwealth teamed up in March to offer a virtual masterclass focused on Solar Tax Equity Investing and Finance. With nearly 100 community bankers in attendance, the event provided insights on the impact of community-based solar projects, SMART policy and revenues, Solar Tax Equity investing, and Solar project lending.
Listen to the full recording here.
Sunwealth’s 25kW solar installation on the roof of the Urban League of Eastern Massachusetts in Roxbury will provide the organization with over $47,000 in lifetime energy savings.
SPEAKER HIGHLIGHTS:
Why Tax Equity for Community Based Solar Projects? / Darreck Mitchell, Director of Capital Markets at Sunwealth
According to the National Renewable Energy Laboratory (NREL), the community-based solar market represents a $500B+ investment opportunity that could provide 20% or more of the nation’s electricity. We need to put capital to work to address climate change. Investing in solar tax credits, also known as solar tax equity investing, provides an opportunity to invest for both purpose and profit.
Wicked SMART! Solar Policy and Revenue Streams in Massachusetts / Tanya Larrabee, Associate at Sherin and Lodgen
In April 2020, the Massachusetts Department of Energy Resources (DOER) expanded its Solar Massachusetts Renewable Target (SMART) program, which provides long-term incentives for solar development. Larrabee, who helped implement the SMART program while working at DOER, detailed the program’s predictable incentive payment structure, and the program’s future. The new additions to the program include storage requirements, penalties for greenfield projects, and stricter land use requirements, all of which further incentivize community-based solar projects which are less controversial around land use issues.
Solar Tax Equity Investment Deep Dive and Biden-Harris Outlook / Omar Blayton, CFO at Sunwealth
Blayton provided a history of solar tax equity investing and an overview of the current tax equity market, where megabanks invested $18B in 2020. He described how the community-based solar market provides a unique tax credit investment opportunity for community banks, with favorable pricing and terms relative to other tax credit investments. He also analyzed the impact that the Biden Harris administration with have in growing clean energy investment opportunities for community banks.
With more than a decade of experience in renewable energy deal structuring, Blayton described the benefits of utilizing a Partner Flip structure, the most frequently used investment structure by institutional tax credit investors. He also described how solar tax credit investing mitigates solar project risks (Listen to this overview at the 56:32-minute mark of the recording.)
Blayton also described key appointments made and actions taken by the Biden-Harris administration that provide favorable tailwinds for community-based solar investment, including the long-term extension of the renewable energy investment tax credit (ITC), increased focus on local community impact and environmental justice, and attractive incentives for pairing multiple technologies (e.g. solar + storage), in order to foster increased resiliency in communities.
If You Can Only Do One Solar Investment Type, Do Tax Equity; If You Want to Do Two, Here is How Solar Lending Works / Beth Goldstein, Partner at Sherin and Lodgen
Beth Goldstein, a partner at Sherin and Lodgen and chair of the firm’s Renewable Energy Group, explained similarities and differences between Solar Lending and traditional commercial lending, noting differences in revenue streams and describing potential debt structures and risk mitigants for solar debt.
(Read more about how Sunwealth approaches underwriting and risk mitigation for community-based solar.)
Listen to the full recording of the Massachusetts Bankers Association Solar Tax Equity Investing and Financing Masterclass.
Speaker Contact Information:
Sunwealth: Darreck Mitchell, Darreck@sunwealth.com
Sherin and Lodgen: Tanya Larrabee, Associate, Tmlarrabee@sherin.com
Want to learn more about Solar Tax Equity investing? Read our full Banking on Solar series.
Interested in putting your capital to work in community-based solar projects? Contact Darreck Mitchell, Director of Capital Markets, at darreck@sunwealth.com.
Darreck Mitchell is Director of Capital Markets at Sunwealth. He has over a decade of experience in financial services, sales management, and asset management distribution. When he’s not helping investors put their money to work, he can be found spending time with his wife and two young daughters.