Las Vegas, NV, February 3, 2021 – Following the success of their inaugural 2020 solar tax equity fund, SOLCAP I LLC, KeyState Renewables, LLC and Corner Power, LLC have launched SOLCAP 2021-1 LLC (SOLCAP 2021), a solar tax equity fund for community and regional bank investors. SOLCAP 2021 is pleased to announce that Horizon Bancorp, Inc. (NASDAQ: HBNC) has committed $13 million as a lead investor. SOLCAP 2021 will raise another $27 million in additional capital through March 31, 2021, when the fund will begin funding a series of mid-size solar projects that will be placed in service in 2021.
SOLCAP 2021 provides community and regional banks with a vehicle to invest in renewable energy investment tax credits (ITCs). Over the past 12 years, solar tax credit investments have been dominated by a group of 20-30 large, corporate investors including Wells Fargo, Bank of America, US Bank, Google, and Apple. These corporate investors are increasingly focused on larger, utility scale investments. This provides a unique opportunity for community and regional banks to invest solar tax equity in the growing, mid-size solar project segment.
In December 2020, Congress passed the Federal COVID Relief Bill which included a provision to extend renewable energy ITCs an additional 2 years. “With this 2-year extension, we now plan to launch solar tax credit funds annually in 2021, 2022, 2023, and 2024,” states Josh Miller, CEO of KeyState Renewables. “The Biden Administration supports a 5-year ITC extension, which would allow for annual funds through 2027.”
The Office of the Comptroller of the Currency (OCC) recently finalized a new regulation, effective April 1, 2021, which expressly supports national bank tax equity investments in renewable power-generation facilities. The rule clarifies and codifies the OCC’s prior guidance provided in OCC interpretive letters and is expected to accelerate community banks’ investments in solar tax credits. Although the new rule only applies directly to national banks and federal savings associations, under existing rules and practices, it will likely also apply to state-chartered banks regulated by state banking authorities and the Federal Reserve or the FDIC.
“This new rule provides national and state-chartered banks with a roadmap for investing in solar tax credits, including specific guidance on the initial and ongoing underwriting and monitoring bank regulators will expect,” notes bank regulatory counsel John Tanselle, a partner at SmithAmundsen LLC in Indianapolis. “It also relaxes the previous ‘notice and non-objection’ requirement for federally chartered entities, replacing it with a more manageable ‘prior written notification’ requirement. We expect this new regulation, coupled with the recent extension of the federal solar investment tax credit, will cause many more community and regional banks to invest in solar tax credits in the coming years.”
Solar tax credit investments typically offer better return profiles than other tax credit investments (such as new market or historical tax credits) because the solar tax credits are recognized immediately, the year the project is placed in service. The solar projects investments can also become an integral part of a publicly traded bank’s environmental sustainability initiatives, just as large institutional investors have begun encouraging mid-cap, public companies to include formal ESG disclosures in their proxies.
About SOLCAP 2021-1, LLC
KeyState Renewables, LLC and Corner Power, LLC are the managing members for each of the SOLCAP investment partnerships. KeyState specializes in providing community banks with independent and innovative investment and insurance structures that have a meaningful impact on earnings. Founded in 1991, KeyState serves over 140 community banks across the country. Based in Las Vegas, NV, KeyState has additional offices in Wilmington, DE and Burlington, VT.
Corner Power’s team of seasoned solar energy professionals has been engaged in the development, financing (tax equity and debt) and fund management of distributed generation solar projects for over twelve years. Corner’s team has sourced, developed and operated solar and energy storage projects for the C&I, municipal and utility markets in the U.S. and India and is based in New York, NY with offices in San Francisco.