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Tariq Siddiqui's picture
COO Upstream EP Advisors LLC

Oil & Energy | Business Development | Capital Projects | Offshore Wind -  Proven leader in offshore development and operations, with 25+ years’ expertise in managing business through cycles...

  • Member since 2021
  • 136 items added with 94,980 views
  • Mar 8, 2021
  • 690 views

KEY INSIGHTS:

 The type of renewable project (solar or wind), its size and its risk profile governs the choice of business model and financial structuring. The success and profitability of the project is largely governed by how well is the deal structured and how efficiently is capital project developed and executed.

The offshore wind (OSW) in US is a nascent industry, there are about 34 projects with 28 GW capacity in pipeline in USA for next ten years. Several new entrants are expected to avail the opportunity through M&A and looking for the right deal that best suits them.  Understanding risks and making the right decision on deal structure is critical, giving the lowest cost and highest return on the investment.

The OSW investors, need government incentives (Feed-in-tariffs) to structure their deals to take best tax advantage, at least initially, until the industry becomes mature enough to survive without them. There is, however, an uncertainty surrounding these incentives that have either expired/limited or expected to expire soon. It is important to watch, whether the new administration under President Joe Biden, will extend these credits and how; legislatively (long-term) or through a limited term using presidential order. The M&A boom in OSW that is forecasted to happen in next few years triggering a wide variety of investors, largely depends on these incentives.

Investment Tax credits (ITC) and Production Tax Credits (PTC) are key value drivers in deal structuring,  the sooner the uncertainty is over about them, the better. 

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