The “One, Big, Beautiful Bill” and the implications for corporate taxpayers and the clean energy industry

Andy Moon, CEO of Reunion, offers S&P Global his perspective on the proposed Republican-led budget bill. He states that while there's a current window for activity as buyers proceed with eligible projects started in 2025, the window will close after the bill's 2028/2029 expiration dates. He noted that Reunion will need to diversify its offerings to serve its extensive network of 300 developers and 150 buyers with adapted financing solutions. With power demand exponentially increasing, alongside bipartisan support for the tax credits and their benefits for Republican-led states, "in some ways maybe we were too comfortable that things would work themselves out," Moon said. The article highlights $40 billion of tax credits were monetized in 2024 through the transfer market. If the cutting of technology-neutral tax credits by 2029 alongside the 2028 phaseout of 45X manufacturing credits is enacted, then "participation by third-party corporations in clean energy project finance would effectively end."

Read the full article here.

Andy Moon, CEO of Reunion, commented on the proposed repeal of transferability for clean energy tax credits.

He stated that despite the House bill significantly shortening the availability window for these credits, market participants are confident that tax credit transfers will be respected in 2025. Moon believes this assurance, particularly assuaging fears of retroactive repeal, will likely accelerate credit transfers through the end of the year. He expects "to see a wave of buyers looking for tax credits in the second half of the year, which will drive prices up similar to what we saw in 2024." Moon also noted that for projects meeting safe harbor requirements, transfers could still occur for the next couple of years, even if the House bill passes as is.

Read the full article here.

Andy Moon, CEO of Reunion, provided comments to Tax Notes on the rapid materialization and evolution of the IRA credit transfer market.  He noted that 2024 began with few buyers, but by midyear, comfort with the process grew, leading to a surge in transactions where credits would sell within days or weeks by year-end.  Moon observed that while purchasers are committing to production tax credits for multiple years, there's reluctance for long-term commitments to ITCs expected in 2026 and beyond, with only a few large buyers engaging in extensive negotiations for such deals.  He mentioned that buyers who acted early in 2024 generally secured lower prices, and while the learning curve of 2024 won't repeat, early movers in 2025 might still benefit by committing despite legislative uncertainty (see Andy’s breakdown of The One, Big, Beautiful Bill).  Moon also highlighted that purchase agreements are now heavily negotiating change-in-law provisions, and the time to close deals has significantly reduced, indicating a maturing market.

Read the full article here.

NOTE TO READERS: This content is current as of Friday, May 23, 2025. Given current discussions in the Senate, we will post updates here as they become available.

On May 22, the House passed the budget reconciliation bill by a vote of 215-214. The bill extends tax cuts from the 2017 Tax Cuts and Jobs Act, while rolling back parts of the Inflation Reduction Act to help cover the cost. Last-minute amendments made to the bill are significantly worse for the clean energy industry compared to the first draft, which was made public on May 12. 

All eyes turn to the Senate, which is expected to moderate the proposed bill.

The proposed bill provides some short-term stability, with a projected uptick in clean energy tax credit transactions for 2025 and the next 2+ years

In the short term, we expect an uptick in clean energy tax credit transactions. The bill provides guidance that current-year and near-term tax credits and associated transfers will be respected.

• Tax credits will not be retroactively repealed for the 2025 tax year
• Tech-neutral credits (§45Y or §48E) eligibility is significantly shortened. However, projects can qualify for under the following conditions:
  
  • Must begin construction within 60 days after enactment of bill, and 
  • Must be placed in service before 12/31/2028 to qualify for credits
• Complex FEOC (Foreign Entity of Concern) restrictions were introduced, but there are short-term exemptions (e.g., at the project level, FEOC restrictions are meant to apply to projects placed in service starting in 2026. However, a possible drafting error exempts projects that are under construction by the end of 2025)

Assume that the bill becomes law in August 2025, and a project begins construction by October 2025 (within 60 days of the bill’s enactment). A project that generates a tech-neutral credit (§45Y or §48E) and is placed in service in 2028 will qualify for the credit, which can be transferred to a third party. This will lead to a wave of projects looking to establish start of construction in the next few months.

In addition, many corporate taxpayers have held off on purchasing 2025 credits due to a lack of clarity on their 2025 tax liability.In particular, three outstanding tax issues have contributed to uncertainty for tax planning departments. While the bill’s impact will be to lower corporate tax liability, buyers will have better visibility into tax liabilities and as a result will be able to more confidently move forward on tax credit purchases:

• Section 174: reinstate immediate expensing of R&D costs for tax years from 2025 to 2029
• Bonus depreciation: reinstate 100% bonus depreciation for property acquired after January 19, 2025, and before January 1, 2030
• Section 163(j): reinstate the more favorable calculation of the limit on the interest deduction under Section 163(j) for tax years beginning after Dec. 31, 2024, and before Jan. 1, 2030

In 2024, a wave of buyers entered the market in the 3rd quarter of the year when they had clarity on their tax liabilities. We could see a similar dynamic this year, with many buyers coming into the market late in the year… and having to compete over a dwindling number of tax credit opportunities.

However, the proposal as written creates significant medium to long-term uncertainty for clean energy projects

In the medium to long term, the proposed changes are concerning for clean energy projects and will significantly slow clean energy deployment if enacted. The primary changes are as follows:

• Accelerated phasedown or reduced eligibility of clean energy tax credits
• Transferability repeal on select credits; notably, §45X credits starting in 2028
• FEOC (Foreign Entity of Concern) restrictions, which will be difficult to comply with as currently written

Summary of proposed tax credit phasedown and transferability repeal schedule

The majority of credits are subject to some form of accelerated phasedown

Under the draft bill, most clean energy credits are subject to some form of accelerated phasedown. 

Projects seeking tech-neutral credits (§45Y and §48E) must begin construction within 60 days after enactment of the bill, and be placed in service by 12/31/2028 to be eligible to claim credits. Projects can establish start of construction through two well-established methods: the physical work test or the 5% safe harbor. 

§45X credits are subject to a faster phasedown, with credits generated from wind energy components only eligible through the end of 2027.

There are a few exceptions:

• §45U (nuclear power production) credits remain unchanged and do not have an accelerated phasedown
• §45Q (carbon oxide sequestration) credits and §45 production tax credits and §48 investment tax credits (with the exception of geothermal heat pumps) remain unchanged and do not have an accelerated phasedown
• §45Z (clean fuel production) credits will be extended, through the end of 2031

The bill proposes repeal of transferability on select credits with a transition period; extending transferability will be a major focus for corporate taxpayers, utilities, and clean energy advocates

Transferability has unlocked a major source of financing for clean energy projects. Fortune 500 corporations from virtually every industry have purchased transferable tax credits, and have started integrating purchases into their tax planning process. Corporations purchased over $25 billion in tax credits in 2024, and the market is expected to continue growing.

Credits generated under the legacy §45 and §48 credits (with the exception of geothermal heat pumps are not subject to transferability changes. Neither are the tech-neutral credits (§45Y, §48E) or the nuclear power (§45U) credits. However, the availability of the tech neutral-credits has been greatly shortened, which negatively impacts the market for transferable tax credits. The clean energy industry will focus on extending the time horizon for these credits in the next round of negotiations.

Credits generated under §45Q, §45X, §45Z, and geothermal heat pumps under §48 are subject to some form of transferability repeal.

The bill includes complex restrictions to avoid benefitting Foreign Entities of Concern. The current draft is problematic and will potentially cause a major slowdown in future clean energy projects, but we don’t expect significant market disruption in 2025

Complex Foreign Entity of Concern (FEOC) restrictions will apply to §48E, §45Y, §45Q, §45U, §45X and §45Z credits to ensure that the benefit of tax credits do not accrue to China, Russia, Iran, or North Korea. Observers expect the language to change significantly in the Senate to make the rules clearer, as the current draft is complex and may not be administrable in its current form.

We do not anticipate significant market disruption in 2025. Most PTCs and ITCs on the market for transfer began construction before 2025 and therefore qualify for the legacy §45 and §48 credits, which are not subject to FEOC rules.

For the newer §45Y and §48E credits, there is a transition period for complying with FEOC rules (e.g., it appears that, due to a drafting error, projects that begin construction before the end of 2025 are exempt from FEOC at the project level. Rules to ensure FEOC compliance at the taxpayer level begin in 2026, and become stricter in 2028).

However, there is an annual compliance requirement to ensure that “specified foreign entities” do not benefit from tax credits. There are also payment restrictions to ensure that prohibited foreign entities do not earn a certain amount of dividends, interest, compensation for services, rents, royalties, or similar payments. For §48E credits, these compliance requirements must be tested for 10 years, and any breach results in a full recapture of the §48E credits. A recapture period this long and also this difficult to diligence will make it more challenging to raise financing or sell tax credits from projects that require FEOC compliance. As a result, we expect the clean energy industry to lobby for clarifications and adjustments to the FEOC restrictions.

For a full discussion of FEOC, please refer to the Tax Law Center’s analysis here, and see Norton Rose Fulbright’s summary here.

Conclusion

We expect a strong, continued mobilization from the industry (including clean energy developers, banks, utilities, and corporates) to advocate against early phasedown of tax credits and repeal of tax credit transferability, and to create a workable version of FEOC regulations.

On May 16, Reunion hosted a webinar with Keith Martin of Norton Rose Fulbright, a leading authority on energy and tax policy. We address these topics in depth – the conversation is available to listen to here.

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Key takeaways from the session: 

• Short-term clarity on the ability to transfer tax credits: Repeals were not retroactive, and will give the market stability to move forward on near-term transactions. We expect an uptick in buyer activity for 2025.
• The Senate historically moderates changes proposed by the House: However, four House Republicans declined to support the bill on May 16, and have demanded additional IRA rollbacks.
• The clean energy industry will be focused on clarifying FEOC (Foreign Entity of Concern) restrictions, and extending transferability:
  • The proposed FEOC restrictions will be almost impossible to administer, and their complexity will slow clean energy deployment. The Senate is expected to simplify the rules.
  • Clean energy developers will rush to start construction to secure FEOC exemption, and preserve ability to transfer credits.

Link to the press release

ATLANTA, GA, UNITED STATES, March 27, 2025 /EINPresswire.com/ -- Dimension Energy (Dimension), a leading community solar developer, owner, and operator, today announced the close of a $128 million tax credit transfer purchase agreement with a Fortune 500 Company for a portfolio of 30 community solar projects totaling 122 MWdc. Reunion Infrastructure (Reunion) introduced the Fortune 500 buyer to Dimension and facilitated the transaction between the parties.

The projects will provide enough local solar energy to power over 17,000 households across Delaware, Illinois, Maine, New Jersey, New York, Pennsylvania, and Virginia. Dimension previously announced that First Citizens Bank, ING, National Bank of Canada, Comerica, Cadence, Denham, and Siemens provided construction financing for the 30-project portfolio.

“We’re thrilled to have this backing to quickly bring new generating capacity onto the grid and offer a low-cost energy choice to more Americans,” said Patrick Schaufelberger, SVP of Project Finance, Dimension Energy. “These are premier partners for Dimension – we look forward to working together to make clean energy work for everyone.”

“Tax credit transferability is a critical component of accelerating the deployment of clean energy projects around the country,” said Billy Lee, Co-Founder and President, Reunion. “We are proud to have supported this transaction and grateful for the opportunity to work with a top tier community solar developer such as Dimension.”

Community solar projects provide power to the nearly 50 percent of individuals who are unable to put solar on their homes or apartments. Dimension’s projects tap into existing infrastructure, generate power where it is needed, and provide low-cost clean electricity to surrounding communities.

“Dimension continues to lead the way in advancing community solar across the U.S.,” said Conor McKenna, CRC-IB Partner & Senior Managing Director. “We’re pleased to support them in navigating the unique complexities of DG solar and positioning their projects for long-term success.”

CRC-IB acted as the exclusive financial advisor to Dimension.

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About Dimension Energy

Dimension Energy is a leading community solar developer, owner, and operator. Dimension has executed more than 600 megawatts (MW) of community solar since its 2018 founding. The company plans to invest over $3 billion over the next 5 years, will have more than 800 MW in pre-construction-to-operations by the end of 2025, and 3.5 GW under development across 13 markets. In the communities where we invest, our projects deliver clean energy, local jobs, tax revenue, and savings, alongside other benefits including workforce development and educational opportunities. Dimension is making clean energy work for everyone. Learn more at www.dimension-energy.com.

About Reunion

Reunion facilitates the purchase and sale of clean energy tax credits. We have worked with major corporations to acquire over $3.5B in tax credits from solar, wind, storage, advanced manufacturing, and other clean energy projects.

Our team of clean energy finance veterans supports buyers and sellers through each step of the transaction process, with a focus on commercial negotiation, due diligence and risk mitigation. To learn more, visit www.reunioninfra.com and download our comprehensive handbook on clean energy tax credit transfers.

About CRC-IB

CRC-IB is a full-service investment bank providing industry-leading financial services across the energy transition. We leverage our capital markets and sector technology expertise to provide innovative project finance, capital raising, and M&A solutions, optimizing client outcomes in an ever-shifting energy landscape. Our belief since inception is that every transaction is a catalyst for change, every closing a step towards a cleaner future. To date, we have executed 360 project and corporate transactions for sustainable energy assets, valued at $78 billion in total. To learn more, visit www.crc-ib.com and connect with us on LinkedIn.