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Energy Tax

Members of the Tax Group at Skadden have significant experience planning and structuring transactions in the energy sector. Our tax-related energy experience also involves assisting energy-focused clients with industry-specific issues, both in the transactional and planning context, and in controversies and litigation, including matters before the Internal
Revenue Service (IRS).

Attorneys in our transactional tax practice have worked on developments, financings, refinancings, acquisitions and dispositions of energy projects and portfolios of all sizes in the U.S. and around the globe. With our broad-based transactions practice, we have assisted numerous clients in evaluating, structuring and implementing novel transactions in the energy sector. In recent years, a primary area of focus has been renewable energy projects, many of which have been structured to take advantage of tax credits, grants and other governmental incentives designed to spur investment in renewable energy. For example, we have assisted clients in the acquisition and financing of solar energy projects and companies, including both photovoltaic (PV) and concentrating solar power projects, as well as in the development, acquisition and financing of wind energy projects and companies. We also have significant experience with biomass, waste-to-energy, geothermal and hydropower energy projects, as well as with projects using more traditional fuel sources such as coal, natural gas, liquefied natural gas (LNG) and nuclear energy.

Many of our attorneys have extensive tax-related administrative and policy experience and have formerly held senior positions in the Treasury Department and IRS, and in key Congressional staff positions. That experience, coupled with our unparalleled tax controversy capability, enables our Tax Group to react quickly in analyzing novel transaction structures and, where necessary, seek rulings or other government guidance to facilitate their prompt implementation.

Skadden’s Tax Group routinely advises clients in connection with tax controversy matters arising with respect to energy projects and the energy industry, including tax accounting matters, in all phases of the dispute resolution process (i.e. audits, appeals, mediation, arbitration and litigation).

Selected transactional representations in recent years have included:

Solar Energy

  • ArcLight Capital Partners, LLC and its affiliate, Terra-Gen Power LLC, in the acquisition and financing of solar energy projects.
  • Bank of America Merrill Lynch, in the tax aspects of its:

    • financing of SolarCity’s SolarStrong project. SolarStrong, which will build more than $1 billion in solar power installations for privatized U.S. military housing communities across the country, would be the largest residential solar PV project in American history. The Financial Times “US Innovative Lawyers” report ranked our representation of Bank of America Merrill Lynch as one of only two matters in the top tier in the energy category for 2012; and
    • $1.4 billion loan by the U.S. Department of Energy for Project Amp, the world’s largest distributed rooftop solar generation project, which supports the installation of 752 MW of PV solar panels on 750 existing roof tops. The electricity generated from these panels will contribute directly to the electrical grid. This project was awarded 2011 “Finance Innovation of the Year” by Renewable Energy World.
  • The Blackstone Group L.P. as tax equity investor in three portfolios of rooftop solar PV projects in the U.S. that were installed by Vivint Solar, Inc.
  • DOE in its guarantee of $1.24 billion of federal loans to High Plains Ranch II, LLC for the construction of a 250 MW solar PV electricity generation facility, located in San Luis Obispo County, California. The DOE’s guarantee and the underlying federal loans are secured by a security interest in all assets of, and all equity interests in, High Plains Ranch II, LLC.
  • First Solar, Inc. in connection with the tax aspects of:

    • a $967 million guaranteed loan from the Federal Financing Bank to support the 290 MW Agua Caliente solar project in Arizona as well as construction arrangements, O&M arrangements, and the sale to an affiliate of NRG Energy, Inc. At closing, this was the largest solar power financing in the world. This project was awarded “Solar Project of the Year” by Renewable Energy World;
    • a $646 million guaranteed loan from the Federal Financing Bank to support Antelope Valley Solar Ranch One, a 230 MW PV project as well as the construction, O&M arrangements, and the sale of the project to an affiliate of Exelon Corporation, who agreed to invest up to $713 million in the project;
    • a $1.46 billion loan to support the 550 MW Desert Sunlight PV project as well as construction, O&M arrangements, and the sale of the project to investors, including affiliates of NextEra Energy. When complete, this will be the largest solar PV project in the world. The financing for the project is being provided by a syndicate of banks and other financial institutions led by Citi and Goldman Sachs. This deal was named “North American Solar Deal of the Year 2011” by Project Finance; and
    • obtaining a conditional commitment for $1.93 billion in loans to support Topaz Solar Farm, a 550 MW solar electric generation project located in eastern San Luis Obispo County, California. Skadden also represented First Solar in the subsequent sale of the Topaz Solar Farm to MidAmerican Energy Holdings Company. This deal was named “North American Solar Deal of the Year” for 2012 by Project Finance.
  • Goldman Sachs Special Situations Group in connection with a $126 million investment in a pool of residential rooftop solar installations developed by Sunrun Inc. The transaction involved two portfolios of rooftop installations, one structured as a purchase by GS Solar I, LLC, a special purpose entity subsidiary of Goldman Sachs, and the other structured as a long-term lease, also by GS Solar I, LLC.
  • a major financial institution in connection with making tax equity investments in various solar PV projects.
  • NV Energy, in its proposed joint venture with Solar Millennium and MAN Ferrostaal Inc. to develop and operate a 250 MW solar thermal project in Amargosa Valley, California.
  • SolarReserve, LLC in connection with a $737 million loan from the Federal Financing Bank to support the Crescent Dunes Solar Energy Project as well as construction, O&M arrangements and the sale of a portion of the project to equity investors. Crescent Dunes uses a concentrating solar power (CSP) tower design with molten salt storage to store the sun’s heat, thus allowing it to generate electricity during the day and at night. This is the tallest CSP project in the world and the first of its kind in the United States.

Wind Energy

  • Airtricity Holdings Limited, owners and developers of wind energy projects in the:

    • $1.4 billion sale of its subsidiary, Airtricity North America, to E.ON AG (Germany); and
    • sale of its European renewable energy business to Scottish & Southern Energy Plc for an enterprise value of €1.455 billion.
  • ArcLight Capital Partners LLC and its affiliate, Terra-Gen Power LLC, in:

    • its acquisition and financing of a portfolio of wind energy projects; and
    • connection with a tax equity financing with Citigroup Global Markets Inc. for a 282 MW wind energy project portfolio located in California, Wyoming, Colorado, Minnesota and Texas.
  • Babcock & Brown in its disposition of:

    • three wind energy projects with a combined capacity of 184.5 MW to NextEra Energy Resources LLC for $352 million; and
    • a wind power development portfolio (comprising a development pipeline of 4,000 MW of wind power in 11 states and four countries) to Riverstone Holdings LLC.
  • Bank of America, N.A. as lender of a $217 million loan to Lease Plan Wind, LLC. The proceeds were borrowed against the revenue generated by a portfolio of tax equity investments in wind generation facilities.
  • a fund of BlackRock Financial Management, Inc. in the acquisition of a 90 percent stake in CWS Wind Farm, LLC, a 30.75 MW wind farm located in Minnesota, and in the sale of a tax equity stake in CWS Wind Farm to a subsidiary of U.S. Bancorp.
  • Deere & Company in the $860 million sale of its subsidiary, John Deere Renewables LLC, to Exelon Corporation. This transaction was named 2010 “Best M&A Deal” by Power Finance & Risk.
  • Duke Energy Generation Services, Inc. in its acquisition of North Allegheny Wind, LLC, the owner of a 70 MW wind power project in Pennsylvania, from Gamesa Energy.
  • Edison Mission Energy and its indirect wholly owned subsidiary, Viento Funding II, Inc., in a $207 million financing of a portfolio of wind energy projects, including the 161 MW Wildorado Project in Texas, the 120 MW San Juan Mesa Project in New Mexico and the 81 MW Elkhorn Ridge Project in Nebraska. The financing consisted of a $189 million secured term loan, a $13 million secured letter of credit facility and $5 million secured working capital facility.
  • Energias de Portugal, S.A., in its $2.9 billion acquisition of Horizon Wind Energy LLC from The Goldman Sachs Group, Inc., including the related sale of tax equity.
  • a major financial institution in connection with tax equity investments in various wind energy projects.
  • NV Energy, in its proposed acquisition of a 50 percent undivided interest in a 160 MW wind energy project to be developed in Spring Valley, Nevada.
  • PensionDanmark A/S, a Danish pension fund with €16.4 billion under management, in a $280 million private placement backing a 430 MW portfolio of U.S. wind farms.

Biomass/Waste-to-Energy

  • a developer in the development of a 120 MW waste-to-energy facility located in Baltimore, Maryland.
  • a developer in the development of an 80 MW waste-to-energy facility located in Puerto Rico.

Geothermal Energy

  • ArcLight Capital Partners LLC and its affiliate, Terra-Gen Power LLC, in the acquisition and project financing, consisting of commercial bank and leveraged lease debt and equity financing, of a geothermal project located in the western the United States.
  • Nevada Power Company in its joint development of a 24 MW geothermal project in Fallon, Nevada.

Other Energy-Related Projects

  • ArcLight Capital Partners, LLC in the sale of a 49.9 percent stake in its 2.5 GW portfolio of five natural gas-fired power plants in Georgia to GE Energy Financial Services and a Singapore sovereign wealth fund. The portfolio of power plants make up the largest fully independent power producer in the southeastern United States.
  • Citizens Sunrise Transmission LLC, a subsidiary of Citizens Energy Corporation, in its lease of a portion of the Border-East 500 kV electric transmission line in Imperial County, Calif., and its issuance of $98 million of 4.85% senior secured notes due 2042 to finance the lease.
  • Coal Emissions Reduction Technologies LLC in connection with the development of 15 refined coal projects and placement of tax equity investments in its projects.
  • Dynegy Inc. in its $825 million acquisition of Ameren Energy Resources Company, LLC and its subsidiaries from Ameren Corporation.
  • Électricité de France S.A. (France) in its $4.5 billion acquisition of a 49.99 percent stake in the nuclear business of Constellation Energy Group, Inc.
  • EnergySolutions, Inc. in its $1.1 billion acquisition by a subsidiary of Energy Capital Partners II, LLC. Skadden also represented EnergySolutions in a related financing matter.
  • GenOn Energy, Inc. in its $6 billion stock-for-stock merger with NRG Energy Inc., which created one of the largest competitive generators in the United States.
  • Great Plains Energy Incorporated in its approximately $2.7 billion acquisition of Aquila, Inc., a distributor of natural gas and electricity, and Aquila’s utilities in Missouri.
  • GS Energy Corp. and GS Global Corp., both affiliates of GS Group (South Korea), and Fine Partners Corporation (South Korea) in their acquisition of oil and gas assets in Oklahoma from Longfellow Energy, LP and $250 million commitment to jointly develop and operate the acquired oil and gas interests with Longfellow Energy.
  • the special committee of the board of directors of Kinder Morgan Inc. in connection with its consideration of the $22 billion going-private leveraged buyout sponsored by Richard D. Kinder, other members of Kinder Morgan management, Goldman Sachs Capital Partners, American International Group, Inc., The Carlyle Group and Riverstone Holdings LLC.
  • multiple investors in connection with making more than $1 billion in tax equity investments in various refined coal projects.
  • Nevada Power Company, in all aspects of the development and construction of a $3.2 billion, 1,500 MW supercritical pulverized coal-fired power plant near Ely, Nevada.
  • NV Energy Inc. in the acquisition of a joint ownership interest in and capacity use arrangements for a Nevada transmission line project, and in connection with a $343 million loan guarantee from the DOE. The project, known as ON Line, will connect power grids in northern and southern Nevada and is the first transmission project to receive a loan guarantee from the DOE.
  • Wisconsin Energy Corporation and its subsidiary Wisconsin Electric Power Company in the $1 billion sale of its Point Beach Nuclear Plant to FPL Energy, LLC, a subsidiary of FPL Group, Inc.