Tax Credit Insurance
Renewable Guard
Approach
Renewable Guard work with experts from Atlantic Group who can provide tailored solutions to secure renewable energy policies before or after production. Tax Insurance can be placed at the time of NTP or COD. For policies placed at time of NTP, only a 10% deposit of premium is required to incept a policy, with the remaining 90% due at mechanical completion and/or COD.
Tax insurance is put in place broadly to protect tax equity investors, sponsors, and developers against specified categories of potential challenges by a taxing authority and/or breaches of representations.
How it works
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Step 1 – Introductory Meeting
We establish the tax credits needs for the project or portfolio of projects and conduct a general intake. A timeline is established for both the marketing phase and underwriting phase of obtaining coverage. Generally speaking, a non-binding indications can be provided within 5 business days of receiving all the necessary documents.
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Step 2 – Coverage Terms
We approach 20+ carriers/managing general agents writing on A-rated insurance paper with substantial renewable experience. The policy term is up to 10 years (15 years in special circumstances ex. 45Q) and the limit of liability is most often the value of tax credits determined to be at risk, such as developer mark-up for ITC deals.
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Step 3 – Pricing
Variance based on scope of covered policy triggers sought and transaction – specific details:
• ITCs/PTCs Tax Policy: 1.75% – 3.0% of the Limit of Liability
• Hybrid ITC/PTC Tax Insurance + Tax-Representation and Warranty (“R&W”) Insurance: 2.0% – 7.0% of the Limit of Liability
• 45Q Recapture: 3% – 6% of the Limit of Liability
• Other Renewable Energy Tax Credits: 1.75% – 8% of the Limit of Liability depending on the covered risk triggers and nature of the project(s)/operations.