Solar Energy Marketplace: Strike Now While the Sun is Hot

solar panel

Attention solar energy developers and EPCs: get to work now and do not stop until the industry “goes dark” or you will miss your chance to capitalize on the recent extension granted by the federal government….the extension of the investment tax credit (“ITC”) (at 30% and then phasing down over time).

Developers and EPCs now have the guaranty that the 30% ITC will be available to them for qualified investment credit facilities until December 31, 2019 (at which time projects commencing construction after that date receive a lesser ITC rate). The relevant statue provides for a phase-out schedule that reduces the ITC to 26%, then 22% and then 10%, which means that for every solar energy project that complies with the federal regulations and is placed in service in accordance with the published schedule, they (or the investment tax credit investor that they secure) will receive an actual tax credit (not tax deduction) in the amount of the specified percentage of qualified costs. The extension of the ITC will provide the economic security that developers and EPCs need to get projects funded and financed.  In addition, the extension enables investors and lenders to feel secure in their equity investment and construction financing because the ITC is a virtually essential element of the deal funding “capital stack”.

With the solar energy marketplace in a virtually exponential growth phase, it is essential that developers and EPCs charge forward to secure as many readily available (willing offtaker or purchaser, economically viable, cooperative utility, etc.) projects as possible within their financial and operational capacity. Once these easy to secure and complete projects have been accounted for, then sales, development and construction efforts will all be more difficult and possibly more expensive.

What can you do to take advantage of the ITC extension (and state solar renewable energy credit (SREC)) programs? Consult with your renewable energy counsel to learn what states should be receiving your most focused project location/sales efforts and how to secure, develop, fund and finance your projects,

Questions? Let Mitch know.

Mitch Cohen is a co-founder and member of Flaster Greenberg’s Alternative and Renewable Energy Practice, representing clients engaged in or considering business ventures in emerging green energy fields such as solar, wind, geothermal, cogeneration, biofuels and biomass. His clients include solar and other alternative energy developers, EPC contractors, energy consultants and alternative energy funding sources. He can be reached at mitch.cohen@flastergreenberg.com or 856.382.2222.

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