Transcript Document

Process/Financing Issues
PROJECT FINANCE ISSUES UNIQUE TO WORKING WITH USG:
• Developer creates special purpose entity (SPE)
• SPE responds to USG request for proposal (RFP) with respect to
power purchase agreement (PPA) and land lease
• USG awards land lease and PPA pursuant to competitive bids
• Key underwriting hurdles include the following
– Project level debt (Stand still provisions, Termination for convenience, etc.)
Basic Partnership Flip
Structure
Basic Lease Pass-Through
Structure
Sale Leaseback
Structure
FIFTH ANNUAL FEDERAL ENERGY WORKSHOP & DEFENSE ENERGY PARTNERSHIP FORUM | PAGE 2
Basic Partnership Flip Structure
Project
Sponsor
1% Pre Flip
95% Post Flip
99% Pre Flip
5% Post Flip
Limited Partner
(Tax Equity
Investor)
100%
Developer
Deferred
Developer Fee
SPE
OpCo
EPC
(Owns and
operates facility)
Partnerships for federal
income tax purposes
Tax paying entities
Denotes an ownership interest
Cash flows from non-owners
Power Buyer
(USG)
Ground Lessor
(USG)
FIFTH ANNUAL FEDERAL ENERGY WORKSHOP & DEFENSE ENERGY PARTNERSHIP FORUM | PAGE 3
Basic Lease Pass-Through Structure
100%
Developer
70%
Deferred
Developer Fee
SPE
“OwnCo”
“Depreciation
Entity”
Partnerships for federal
income tax purposes
Project
Sponsor
Master Lease
30%
1% Pre Flip
95% Post Flip
SPE
“OpCo”
Limited Partner
(Tax Equity
Investor)
99% Per Flip
5% Post Flip
“Tax Credit
Entity”
Pass-through ITCs
Tax paying entities
Denotes an ownership interest
Cash flows from non-owners
Power Buyer
(USG)
Ground Lessor
(USG)
FIFTH ANNUAL FEDERAL ENERGY WORKSHOP & DEFENSE ENERGY PARTNERSHIP FORUM | PAGE 4
Sale Leaseback Structure
$
Project
Sponsor
$
100% interest
PPA/Lease Payments
SPE - Single
Member LLC
(Lessee )
Purchase & Sale
Agreement
Constructed Project
Lease Agreement
Single Member
LLC (Lessor)
100% interest
Lease Payments
Investor
Ground Lessor
and Power Buyer
(USG)
Lease Agreement
Power
SPE
OpCo
FIFTH ANNUAL FEDERAL ENERGY WORKSHOP & DEFENSE ENERGY PARTNERSHIP FORUM | PAGE 5
Contact Information
Tony Grappone
Novogradac & Company LLP
101 Arch Street, 10th Floor
Boston, MA 02110
Tel: 617.449.3030
Fax: 617.330.1922
[email protected]
www.novoco.com
FIFTH ANNUAL FEDERAL ENERGY WORKSHOP & DEFENSE ENERGY PARTNERSHIP FORUM | PAGE 6