INTERVIEW: Bildmore Renewables CEO discusses new tax equity investment platform
Bildmore Renewables, backed by EnCap Energy Transition Fund (EETF), is a newly launched platform that aims to support renewables and energy transition projects in the US by helping sponsors to tap more efficiently into the tax-related incentives under the IRA.
“We do not see the area of need as funding the same type of projects that would draw the traditional tax equity investment. Bildmore is creating a tax equity alternative instead,” says David Haug, chief executive officer (CEO) at Bildmore Renewables in an interview with NPM.
Traditional tax equity investors have deployed an amount of capital that annually has ranged between USD 20bn and USD 23bn. With the passing of the IRA and the opportunities it unlocked, competition for tax funding sources is at an all times high, and traditional tax equity investors can be ever more selective. Bildmore could partner with fully-merchant projects, with projects sponsored by new developers, or projects located in volatile territories like ERCOT.
“Our proposal would provide a sponsor economics that would sit between the classic structure with a tax equity investor, and the sponsor selling by itself the tax credits at market prices,” Haug explains. “Partnering with us will enable the sponsor to maximize value from available tax credits.”
Via partnerships, Bildmore will provide minority equity investment to the projects, but will not allocate the tax credits to itself. They will instead be sold to third party buyers using the IRA transferability provisions and the proceeds divided with the sponsor.
Although the scope of the platform is wide and it can invest in multiple energy sources, Bildmore will initially target standalone storage and other renewable projects in the range of 100 MW to 500 MW of capacity. The partnerships or structures that the company will offer first are built around investment tax credits (ITC), but at a later point the leadership plans to start investing in projects electing production tax credit (PTC) structures.
“Because we and the EnCap team have a lot experience as developers ourselves, I believe that one of our most significant value propositions is that we approach the sponsor relationship with flexibility, understanding the needs of a developer, not as just a financial institution,” Haug points out.
“Moreover, we can be nimble. When we make an investment decision, we will be able to execute it quickly, because we have only one rather than several layers of approval. And we understand that each project will present a unique set of opportunities and challenges, so the transactions we will get involved in will have different structures, not following a similar template of boxes to be checked,” he adds.
Bildmore expects to make 10-to-15 minority investments annually.
The backing of EETF provides an extra layer of experience to the Bildmore team, as the asset manager has already gone through a successful investment cycle that included supporting Broad Reach Power and Jupiter Power, two US battery storage developers.
In August last year, the EnCap Energy Transition Fund I and its co-investment partners sold Broad Reach Power to Engie for USD 1bn. Prior to that in 2022, it had sold Jupiter Power to BlackRock.
*This story was originally published exclusively for NPM subscribers last month.
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