SOURCE: Advantage for Analysts

Advantage for Analysts

November 16, 2009 13:55 ET

Financing Structures Offer Renewable Energy Developers Compelling Economics

SAN FRANCISCO, CA--(Marketwire - November 16, 2009) - Advantage for Analysts, Inc. ("Advantage") recently published a case study analyzing the economic and competitive tradeoffs of various renewable energy term financing structures under the Cash Grant regime. The study highlights that although the Cash Grant makes debt-only structures a viable option for Sponsors, alternative structures using tax equity and debt offer compelling economic benefits. The October 2009 edition of North American Wind Power (NAWP) references this case study in an article titled "Analyzing How Incentives Impact Capital Structures." These perspectives apply generally to all renewable energy technologies in addition to wind energy.

The authors, Dennis Moritz, Mahmut Karayel and Rajiv Advani, advise Sponsors to proactively analyze these structures to find the right balance of tax equity and project debt that reduces the project's cost of capital. Although requiring complex analyses, the article indicates this effort pays off. "Structures with tax equity and debt create ample incremental value to justify the additional complexity and transaction costs. This value also extends to downside cases."

The authors support these findings with in-depth, economic analyses of different capital structures. The combination of project debt and tax equity reduced the equity commitment from Sponsors while increasing their yields and NPV.

About Advantage for Analysts®

Advantage for Analysts, Inc. ("Advantage") provides solutions for structuring, analyzing and tracking Tax Equity financing structures for renewable energy projects. The Advantage team was originally a part of Babcock & Brown but became an independent entity in 2004. Learn more at

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