Financial Modelling for US Tax Equity

Mazars Financial Modelling

Financial Modelling for US Tax Equity

Upcoming dates Course agenda

1 day duration

Renewable energy projects in the US regularly feature tax equity structures that can be complex to understand and difficult to implement in your financial models.

This one day course will provide you with an appreciation of the current trends and macroeconomic factors influencing the US tax equity & renewables market and an overview of the renewable energy incentives.  You will develop a detailed understanding of the various tax equity credits such as ITC & PTC and how changes in regulation have & continue to affect these. You will gain an appreciation of the commonly used tax equity structure such as partnership flip, sales leasebacks and inverted lease as well as an overview of MACRS – the accelerated tax depreciation in US.

Through hands-on experience led by our expert trainers and using our interactive case study model you will incorporate a partnership flip structure factoring in adjustments to the ProjectCo and HoldCo cashflow waterfalls and considering the pre and post-flip partnership terms.  You will be guided through the allocation of tax attributes and liabilities between sponsor equity and tax equity & discuss the concept of back-leverage and high-level HLBV associated with tax equity.  Your learning will be cemented through the analysis of returns to sponsor equity and tax-equity participants and a business case session to analyse alternative tax equity scenarios.

Key learnings

  • Hands on model development led by our expert trainers who will guide you through the steps needed to successfully implement US tax equity structures in your models
  • Technical discussions on the US tax equity & renewables market, identifying the various tax credits available and the influence of future legislation
  • Understand how the implementation of tax equity structures can affect your financial model, identifying the impact on sponsor & tax equity investor returns and the changes that are required at the ProjectCo and HoldCo levels
  • Learn best practise techniques for incorporating tax equity structures into your financial models following our proven financial modelling methodology

Is this programme for you?

This course is suitable for anyone who works with models that fall under IFRIC12 – Service Concession Arrangements. Typical attendees would include Analysts, Managers, Senior Managers and Associate Directors.

Course prerequisites

As the contents of this course will guide participants through best practise modelling techniques and the process of building a financial model there is no prior training requirement for taking this course.  Some knowledge of the US renewables sector would be beneficial.

Upcoming

Location: Date:

Course Agenda

Overview of the US renewable energy market and main tax equity drivers

  • Review of the US renewable energy market and energy incentives to gain an insight into the current macroeconomic factors influencing the US tax equity market and discussion around the key metrics currently observed for US renewable energy transactions
  • Develop a detailed understanding of the tax credits (ITC and PTC), the current regulation potential changes and how the credits are applicable for different technologies
  • Model MACRS – the accelerated tax depreciation method in the US – and discuss how this can drive an accelerated tax shield which can benefit your financial returns
  • Discuss commonly used tax equity structures, such as partnership flip, sales leasebacks and inverted lease
  • Incorporate a back-leverage debt structure into your models and gain an appreciation as to why this is an important and common form of debt structuring in projects featuring tax equity structures
  • Model the partnership flip structure taking into account, among other things, ProjectCo and HoldCo cashflow waterfalls and pre- and post-flip partnership terms

 

Implement the tax equity structure in a financial model

  • Gain hands-on modelling experience in implementing a tax equity partnership flip structure into the case study model
  • Discuss in detail the allocation of tax attributes and liabilities between sponsor equity and tax equity and how these translate in the modelling
  • Learn about the high-level HLBV concepts associated with tax equity and how these can impact on your projects
  • Develop best practice techniques in order to calculate and analyse returns at ProjectCo and HoldCo for both sponsor equity and tax-equity participants
  • Develop alternative tax equity scenarios in order to evaluate these and to simulate a business case review