Clean energy developers are increasingly looking to privately held investors to ensure they can do enough work to keep their projects fully eligible for tax credits that start phasing out next year. With different capital constraints and underwriting requirements than banks and other commercial lenders, private lenders have historically been able to be a bit more agile in offering debt products to developers.
Bracewell’s Jeeseon Ahn told Law360 there are new players coming into the renewable energy financing space, such as credit funds that are expanding their private financing offerings.
“We’re not seeing demand for renewable power going away, despite the tax credit cliffs,” Ahn said. “Commercial bank loans are not going to be enough to fill the capital need.”
Bracewell’s Jared Joyce-Schleimer said that many developers are already starting to think about how they can fill the financial hole for projects that won’t be eligible for tax credits.
“At a certain point, they’re going to have to fill that gap in the capital stack, and they won’t be able to rely on receiving bridge loans based on past credits,” Joyce-Schleimer said. “We should see a move toward increased amounts of private finance to be used to fund the needs of the projects that are still economically viable.”
