For many years now, tax equity partnership flip structures have been used primarily to finance investments in solar and wind projects and it is a common source of confusion for financial modellers working to prepare a dynamic and transparent representation of this event. Efficient monetization of tax credits remains the driving force behind these complicated structures for these industries. This sophisticated form of partnership balances both the short/medium term appetite of an investor who chooses to defray net income with solar and wind tax credits, and the long-term involvement of a sponsor relying on development fees and project cash flow to achieve their target returns.
At Corality we work with clients to achieve their goals faster and with increased certainty. Commonly our work evolves around financial model development for project finance transactions in the wind and solar energy sectors, and in this post I would like to share some considerations which may assist you in your own situation.