April 25, 2024
8 min read

Buying 45X Advanced Manufacturing Production Credits & Due Diligence Considerations

A guide to buying §45X tax credits and conducting due diligence.

The IRA created a new clean energy tax credit, the §45X AMPC

The Inflation Reduction Act of 2022 introduced a new class of production tax credit — the §45X advanced manufacturing production credit (AMPC). The credit is for eligible components produced and sold after December 31, 2022 and is transferable under §6418.

The §45X tax credit is generated via the production and sale of:

  • Sustainable energy components: Five categories of eligible sustainable energy components including solar modules, battery cells, or wind blades, nacelles, or towers
  • Critical minerals: 50 applicable critical minerals that attain a specified purity level

A list of eligible components, critical minerals, and related tax credit amounts is included below.

§45X transfers have taken off since the IRS issued guidance in December 2023

In December 2023, the Department of the Treasury released proposed regulations on §45X tax credits, which opened the door for transactions to begin.

Notably, Fiserv (NYSE: FI) agreed to purchase $700M in §45X tax credits from First Solar (NASDAQ: FSLR) at a price of $0.96 per dollar of credit, resulting in $28M of tax savings for the 2023 tax year. The public announcement of a large-scale transaction has led to significant interest from corporate buyers in §45X tax credits.

Key characteristics of §45X AMPCs

Generated over time

§45X AMCPs are generated on a rolling basis from the (i) production and sale of eligible components or the (ii) conversion of critical minerals to a specific purity level. As we'll discuss below, this opens the door for buyers to negotiate quarterly or monthly payment terms.

No recapture risk or prevailing wage and apprenticeship requirement

There is no recapture or prevailing wage and apprenticeship (PWA) provision, reducing risk associated with §45X tax credits.

Eligible for direct pay or transfer

As with §45Q and §45V credits, generators of §45X credits may elect to be treated as an “applicable entity” for the limited purpose of making an elective payment election, also known as direct pay.

Careful consideration should take place before electing in or out of direct pay for §45X credits. The election is rigid in that there are no partial elections:

  • The election applies to all eligible credits from the applicable facility, and
  • The election applies to the entire taxable year for which the election was made and all subsequent taxable years ending before January 1, 2033

Additionally, an electing taxpayer may file an irrevocable election to revoke the elective payment, but the revocation applies to the entire taxable year in which the election to revoke takes place and all subsequent taxable years remaining before January 1, 2033.

In short, AMPC generators may elect to take five years of direct pay with the IRS or transfer the credits to another taxpayer, and the ability to do both is significantly limited.

Commercial guidelines for buyers of transferred §45X tax credits


Sellers of §45X tax credits range from large, multinational companies to smaller, domestic producers. Tax credit buyers may require sellers to procure tax credit insurance if there is uncertainty around their longevity and/or ability to cover indemnities relating to the sale of credits.

"Unaffiliated third party" buyers

In order to generate AMPCs from the production and sale of eligible components, buyers of manufactured components must be unaffiliated third parties unless a related party election has been made under §45X(a)(3)(B).

All sales must be for “productive purposes” and not solely to claim the §45X tax credit.


In Q1 2024, median pricing to buyers ranged from $0.91 to $0.95 for single-year 45X credits. The relatively high pricing reflects the lower risk profile of AMPCs compared to investment tax credits (ITCs).

Drivers of larger price discounts include smaller transaction sizes, less established sellers, and forward contracts for credits that have not yet been generated.

Payment terms

AMPCs are sold in arrears of generation. Unless the AMPCs are sold in a single closing, most sellers will accept quarterly or monthly payment terms, allowing buyers to recognize the value of the credit before issuing payment to sellers.

Due diligence checklist for §45X tax credits

While §45X credits are not subject to PWA requirements and do not carry the same recapture or basis-related qualification risks as §48 ITCs, they do carry additional qualification risks that are absent from other, power generation-related tax credits such as the §45 production tax credit (PTC).

Buyers and their advisors should conduct due diligence on several core aspects of §45X tax credit qualification to avoid a situation where credits are improperly accounted for and subsequently disqualified — a risk that flows through to the buyer in a transferability transaction. 

Here is a recommended due diligence checklist for §45X credits.

Diligence point Required documentation Explanation
Correct credit amount Description of component type with technical specifications; copies of audited production and sales volumes. Section §45X provides a list of eligible components, their associated AMPC amount, and any design parameters / capacity limits that are required to qualify for credits. The production of eligible components must be completed in 2023 or later, and the tax year where credits may be claimed is driven by the year in which the sale is completed.
Ensure components were “produced by taxpayer” Third-party verification that the seller conducted “substantial transformation” of the related components. Copies of any contract manufacturing agreements. The credit is awarded only to the taxpayer who conducted the “substantial transformational” in a trade or business of the taxpayer. The regulations differentiate between “substantial transformation” versus “mere assembly” where the former is required to claim a credit. Parties to a contract manufacturing arrangement may choose who claims the credit by signed agreement prior to the completion of eligible components.
Domestic production Documentation of the physical location where the eligible component was produced. Only eligible components produced in the United States and its territories are eligible for a tax credit. Elements, sub-components, and materials used in the product of an eligible component are not subject to the domestic requirement.
No §48C investment tax credits Confirmation the facility is not claiming §48C investment tax credits anywhere in the assembly line for the §45X components. Facilities that claim §48C investment tax credits are only eligible for AMPCs if the assembly line for §45X eligible components operates independently from the §48C assembly line or factory.
Third-party sale for productive purposes Confirmation that components are sold, for a productive purpose, to third parties, or that a valid “related person election” is/will be filed with the IRS. Generally, §45X tax credits are only generated upon component sales to a third-party, so a sale to an affiliate would not generate a tax credit until subsequent resale by the affiliate to a third party. An annual election can be made with the IRS to treat an affiliate as a third party for purposes of determining §45X tax credits.

Eligible components and related §45X tax credit amounts

The table below shows the eligible components that qualify for §45X credits as well as the amount of tax credit.

Solar energy components
Eligible Component Value per Unit Unit
Thin film or crystalline photovoltaic cell $0.04 Capacity in Wdc
Photovoltaic wafer $12.00 Square meter
Solar-grade polysilicon $3.00 Kilogram
Polymeric backsheet $0.40 Square meter
Solar module $0.07 Capacity in Wdc

Wind energy components
Eligible Component Value per Unit Unit
Related offshore wind vessel 10% Sales price of vessel
Blade $0.02 Watt of completed turbine capacity
Nacelle $0.05 Watt of completed turbine capacity
Tower $0.03 Watt of completed turbine capacity
Offshore wind foundation using fixed platform $0.02 Watt of completed turbine capacity
Offshore wind foundation using floating platform $0.04 Watt of completed turbine capacity

Torque tube and structural fastener components
Eligible Component Value per Unit Unit
Torque tube $0.87 Kilogram
Structural fastener $2.28 Kilogram

Inverter components
Eligible Component Value per Unit Unit
Central inverter $0.0025 AC watt capacity
Utility inverter $0.015 AC watt capacity
Commercial inverter $0.02 AC watt capacity
Residential inverter $0.065 AC watt capacity
Microinverter or distributed wind inverter $0.11 AC watt capacity

Electrode active materials
Eligible Component Value per Unit Unit
Electrode active materials 10% Costs incurred by the taxpayer with respect to the production of electrode active materials

Battery components
Eligible Component Value per Unit Unit
Battery cell $35.00 Capacity in kWh (limitations apply - see instructions to IRS Form 7207)
Battery module which uses battery cells $10.00 Capacity in kWh (limitations apply - see instructions to IRS Form 7207)
Battery module which does not uses battery cells $45.00 Capacity in kWh (limitations apply - see instructions to IRS Form 7207)

Critical minerals

For critical minerals, the tax credit value is 10% of the production cost. §1.45X-4 of the proposed regulations clarifies what costs are includable or excludable in the 10% calculation.

Aluminum Antimony Arsenic
Barite Beryllium Bismuth
Cerium Cesium Chromium
Cobalt Dysprosium Erbium
Europium Fluorspar Gadolinium
Gallium Germanium Graphite
Hafnium Holmium Indium
Iridium Lanthanum Lithium
Lutetium Magnesium Manganese
Neodymium Nickel Niobium
Palladium Platinum Praseodymium
Rhodium Rubidium Ruthenium
Samarium Scandium Tantalum
Tellurium Terbium Thulium
Tin Titanium Tungsten
Vanadium Ytterbium Yttrium
Zinc Zirconium

Subject to a four-year phase-out (except for critical minerals)

With the exception of critical minerals, the amount of credit begins phasing out for sales occurring after December 31, 2029. As a result, the amount of tax credit is 75% for components sold during calendar year 2030, 50% for components sold during calendar year 2031, 25% for components sold during calendar year 2032, and 0% thereafter.

Learn more

Reunion is actively transferring §45X tax credits from a variety of clean energy manufacturers. To learn more about sourcing, diligencing, and purchasing §45X AMPCs, please contact Reunion's experienced transactions team.

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