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Hot Topics in Deal Structuring

Hot Topics in Deal Structuring

Moderator: Henry Berling, Advisory Managing Director, KPMG in the US.

Panelists: William Gerald Demas, Executive Director, Copenhagan Infrastructure Partners; Mark Liffmann, Chief Executive Officer, Omnidian ; Jeff Weiss, Co-Chairman and Managing Director, Distributed Sun; Scott Zajac, Chief Executive Officer, Rockwood Asset Management.

The renewables industry is coming off double-digit growth but facing several challenges, including the run-off of federal tax credits.
"The landscape is changing," Berling said as he set the stage for the discussion. "We've got the good and we've got some headwinds. But I think everybody is here because we believe the industry has an opportunity to fulfill the stated objectives of doubling again over the next 10 -12 years."

Panel participants agreed that four elements are driving development, efficiency and innovation in renewables: technology, engineering, capital markets, and regulation. 

The industry is dealing with the negative impact of tax reform on tax equity returns.
"The tax law is awful for our industry. Let's just call it what it is," Weiss said. Due to the new legislation, "tax equity is still wonderful, but it's 5 percent less wonderful."

To counter that, Weiss said developers are now in the position of trying to convince sponsor investors that lower taxes will help make up the difference.

Recently imposed tariffs were misguided, but not insurmountable.
"When the tariffs were announced on the panels and subsequently steel, everyone thought the world was over," Demas said. "But guess what? Everybody's got a little more room than they tell you."

Renewables need to meet the needs of the capital markets to tap assets.
Investors need to meet the industry halfway, too, according to Demas. "Those of us who want to invest in the sector have to not think of it as asset acquisition or asset investment, but asset creation," he said. "You don't get long-term predictable cash flows just by showing up. You have to put some work into it. I think capital has to be entrepreneurial and creative, versus just being a financial investment."

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