It’s clear the field of renewable energy is one that holds great promise for America’s — and the world’s — future.
Until recently, investing in this industry has had the same potential benefits — and the same potential drawbacks — as seen in other emerging technologies over the years. Those who entered did so at their own peril.
But recently my firm, Cherrytree Group, put together and closed on an deal that shed millions of dollars in tax credits, depreciation and cash flow for our client investors in quick order, without the same vulnerabilities as faced by typical equity investments.
Let me tell you how it all came about:
Our clients are investors who were looking to offset their Federal tax liabilities for 2016 but wished to do so in a safe, prudent and compliant fashion. We scoured the marketplace for developers who wished to sell the tax credits gained from their renewable energy projects, and reached out to developers who didn’t even realize such opportunities exist.
We decided to work with a highly regarded developer: Golden Goose Renewables, a unit of Golden Goose Capital — a boutique private equity firm that invests in commercial real estate and renewable energy businesses. The firm’s portfolio includes over 50 megawatts of solar power generation facilities throughout New England — including the largest solar array in New Hampshire.
So that tax credits could be secured, Cherrytree invested $625,000 in the Fund in order to satisfy IRS Safe Harbor considerations. We also provided due diligence, fund structuring, compliance and indemnification support services.
Next, the fund invested in three of Golden Goose’s commercial solar array projects: located in Milton, Dover and Keene, all within New Hampshire. Together, these projects generate 1.3MW of power.
Timing was of the essence, and we closed this deal on December 30 — just before the end of the tax year. The fund’s two individual investors will receive tax credits, depreciation and cash flow valued at approximately $3 million.
To be able to support New England’s generation of renewable energy — and reduce our dependence on fossil fuels for our electricity — by utilizing the tax code is a wonderful example of how the marketplace can achieve both financial and environmental goals. The tax credit fund’s individual investors will greatly reduce their tax bills, and the developers have developed a promising business providing energy to hundreds of New Hampshire residents and businesses.
I would be happy to discuss this case with developers who are contemplating projects involving renewable energy, historic structure rehabilitation or removal of contaminated land for development. Likewise, I would be pleased to consult with investors who wish to reduce their tax bills by taking advantage of the generous state and Federal tax credit programs.