Zach Dell

On the other hand, it's just cash flows.

If you understand how the capital markets work and how lenders think and how to communicate with them, you can finance these assets in a super capital efficient way.

There's a pretty mature industry out there for what I'll call tax capital, tax credit transfer vehicles, and then tax equity, what are called partnership flips.

So basically, ways to monetize tax credits if you don't have a large tax liability.

So unfortunately, we aren't insanely profitable and generating tons of taxable income.

And so we have all these tax credits that we can't monetize.

So we have to either transfer those tax credits to someone who can monetize them or sell them in a tax equity partnership structure to someone who can monetize them.

These tax credits have been around for some time.

There's precedent for this and there's structures in place that firms and companies have used.

You've seen it in residential solar.

I think Sunrun is probably the best example of a really mature capital markets team that has nailed the securitization and tax equity playbook.

And we'll talk about securitization in a second.

So that's the tax side.

On the debt side, you really have two flavors.

You have project finance and you have asset-backed securitization.

Project finance is typically taking...

a bunch of assets and putting them typically in an SPV and then lending against the cash flows that go into that SPV.

There's a bunch of things to consider here, which is the kind of asset.

Is it wind?

Is it solar?