SNL Power Daily recently conducted a Q&A with Stoel Rives attorney Morten Lund about the future of renewable energy financing, should the federal production and investment tax credits permanently expire. The PTC is currently slated to expire at the end of this year, with the ITC set to expire at the end of 2016.
Described by SNL as a "mainstay on solar financing panels," Lund describes how tax credits have served as the bedrock of renewable energy finance. "The entire [financing] structures are built around allocation of tax benefits, and once there are no tax benefits then the need for those structures goes way," he said. While Lund expects that prices would increase immediately without tax credits, he also predicts that financing availability will increase significantly, offsetting much of the price increase.
Lund predicts that the expiration of tax credits will ultimate improve the renewables finance market because: (a) the financing structures will be simpler without the need for very specific tax structures, and (b) developers will no longer need to rely on the same handful of tax equity providers. "Nothing kills or prevents successful projects more than just the lack of access to or availability of tax equity or just the cost associated with tax equity financing," he notes.
"Renewables funding expected to expand once tax credits, equity markets fade out" was published by SNL Power Daily, July 3, 2012. Subscription required.