January 18, 2021

Volume XI, Number 18

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January 15, 2021

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

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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© 2020 McDermott Will & EmeryNational Law Review, Volume X, Number 339
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About this Author

Heather Cooper, Energy Attorney, McDermott Will & Emery Law Firm
Counsel

Heather Cooper is counsel in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Miami office.  She 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. Her national practice includes advising on renewable energy transactions, such as solar and wind projects.

305-329-4473
Partner

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.

Carl provides legal and commercial advice for the development, construction, operation, purchase and sale, and financing of projects and infrastructure, including...

202 756 8917
Partner

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.

Chris has extensive experience advising clients...

202 756 8240
Partner

Debra A. Harrison is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Washington, DC. office.  As a member of the Corporate Department, Debra focuses her practice on renewable energy transactions, general corporate matters, franchising, licensing and distribution matters, as well as other business growth strategies.

202-756-8616
Joel A. Hugenberger, McDermott Law Firm, Corporate Finance and Energy Attorney
Partner

Joel A. Hugenberger advises clients on tax equity, project finance, acquisition finance and corporate finance transactions in the energy and infrastructure sectors.

Joel represents tax equity investors, 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 and tax equity investment structures. 

212-547-5440
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