Partnership flips are the most popular form of tax equity financing for renewable energy projects in the United States. Our partnership flip model, which is used by large utilities, developers, finance companies, and private equity firms, evaluates the returns on renewable energy projects that can use the Investment Tax Credit.
In a partnership flip, a developer (Sponsor) and a tax equity investor (Tax Equity) form an equity partnership (ProjectCo) to own solar or wind assets. The partnership independently allocates income, tax credits, and cash to the partners. For more details, please refer to Tax Equity 201: Partnership Flips.
Our model gives you full control of the inputs both globally (investment-level) and locally (portfolio-level). The model also breaks out the calculations associated with portfolio operations, partnership tax accounting, and partnership GAAP accounting (HLBV). More specifically:
- Input 1: controls the global inputs. You can control assumptions for investment by Tax Equity and the sponsor, allocations to each partner, project-level debt, back leverage, and more. This page also provides a summary of the main model outputs.
- Input 2: controls portfolio inputs. You may separate the portfolio into up to 12 tranches. You can identify size, expenses (both capital and operating), revenue, electrical production (annually and monthly), and incentives. You may also include any construction debt taken out for each tranche. This page also provides a summary of the main model outputs.
In addition to the input worksheets, we include calculation sheets for the following:
- Tranche: calculates the operation of each tranche in the portfolio, including receipts, expenses, and depreciation.
- Portfolio: consolidates all the tranche sheets.
- ProjectCo: models the partnership accounting for tax purposes (based on operation from Portfolio sheet).
- Sponsor: models sponsor-specific costs, net income, and returns including the construction phase.
- Cash Flow and IRR: calculates the IRR for both the Tax Equity and the sponsor based on their respective cash flows after the ProjectCo is created.
- ProjectCo GAAP: calculates the GAAP financials for the partnership using the HLBV method.
- Investor GAAP: calculates the impact on each of the partners’ GAAP financial statements.
These calculations result in after-tax IRR and NPV outputs for Tax Equity and the sponsor.
The model is built in Microsoft Excel 2016 and comes fully unlocked. You may modify it as you wish to meet the particular needs of the project(s) you are evaluating. Because of the size of this model, Woodlawn Associates offers a one-hour walkthrough with purchase of the model, and would be happy to help with any modifications you may have.
We also offer custom modeling services, so if working through the details is more than you have time for, please contact us.
(Note: Due to the almost infinite number of possible variations in projects, we cannot guarantee the model is suitable for your project as-is. If you have questions, feel free to contact us before purchasing.)