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

On October 24, 2024, the Department of Treasury and the Internal Revenue Service (IRS) issued final regulations for the Advanced Manufacturing Production Credit (§45X). The final regulations were published in the Federal Register on October 28, 2024 and are largely consistent with the proposed regulations issued on December 15, 2023.

Noted below are key changes as well as clarifying guidance that were issued in the final regulations. Jump to a section:

• Key changes
• Clarifying guidance
• Key dates
• Appendices

For a primer on 45X credits and due diligence, please refer to our insights here.

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Distinguishing "minor assembly"

The final regulations replace each instance of "mere assembly" with "minor assembly" to clarify what activities meet the substantial transformation threshold required to qualify for §45X tax credits.

The guidance recognizes that certain eligible components such as a solar module or a battery module are produced primarily by assembling other components. In these cases, the assembly required to achieve production of the ultimate eligible component (solar module or battery module) should not generally be viewed as disqualifying “minor assembly.”

Furthermore, eligible components that have completed substantial transformation, are considered “produced by the taxpayer,” and have been produced and sold to a third-party, in which only “minor assembly” remains, does not disqualify the original party from claiming the §45X credit. As a result, the ensuing third-party who performs the “minor assembly” would not be eligible to claim the credit.

Production costs expanded for critical minerals and electrode active materials

The final guidance is intended to recognize the value of material costs while addressing concerns regarding multiple-crediting and unintended incentives. The proposed regulations did not specifically allow direct material costs, indirect material costs, or any costs related to the extraction or acquisition of raw materials to be considered as production costs. However, the Treasury Department and the IRS, after consultation with the Department of Energy, have reconsidered the proposed exclusion of all material costs based on comments received and revised the regulations to include extraction costs for raw materials sourced in the U.S. or its territories if incurred by the taxpayer claiming the credit.

Additionally, if a taxpayer acquires extracted raw material as a direct (or indirect) material cost, the material costs may be included as production costs consistent with the rules provided under section 263A regardless of whether the extracted material is domestic or foreign-sourced.

Furthermore, any inclusion of direct and indirect material costs may be included if certain conditions are met, but only if they are not for materials that are already an eligible component at the time of purchase (e.g., applicable critical mineral or electrode active material), and as such, an additional credit cannot be claimed on costs relating to the acquisition and use of other eligible components.

See also "Additional substantiation requirements for critical minerals and electrode active materials."

Additional substantiation requirements for critical minerals and electrode active materials

In order to include direct or indirect materials costs as production costs when calculating a §45X credit for the production and sale of critical minerals or electrode active materials, a taxpayer must include certifications from each supplier, as an attachment to the tax return, and maintain specific books, records, and documentation to substantiate the credit.

The certifications must include the supplier’s employer identification number, be signed under penalties of perjury, and state that the supplier is not claiming a §45X credit for the materials purchased, nor is the supplier aware of any prior supplier claiming a §45X credit in the chain of production for the materials.

The books, records, and documentation requirements include, whether prepared by the taxpayer or (ideally) a third-party:

• An analysis of any constituent elements, materials, or subcomponents that concludes the material did not meet the definition of an eligible component (for example, an applicable critical mineral or electrode active material) at the time of acquisition by the taxpayer
• A list of all direct and indirect material costs and the amount of such costs that were included within the taxpayer’s total production cost for each applicable critical mineral
• A document related to the taxpayer’s production activities with respect to the direct and indirect material costs that establishes the materials were used in the production of the applicable critical mineral

Failure to provide this documentation with the return filing, or failure to provide an “available upon request” statement, would constitute a failure to substantiate the tax credit claim.

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Definition of produced by the taxpayer

‍The final regulations expanded the definition of “produced by the taxpayer” to confirm that taxpayers may produce eligible components using recycled materials (secondary production). The updated definition now reads, “Primary production involves producing an eligible component using non-recycled materials while secondary production involves producing an eligible component using recycled materials.”

Clarification on §45X vs §48C facility

‍The final regulations simplified the definition of a §45X facility, replacing the term “production unit” with “independently functioning tangible property” that is used and necessary for the eligible component to be considered produced by the taxpayer, regardless of physical location. Accordingly, tangible property used to produce a subcomponent which is later integrated, incorporated, or assembled into a distinct and final eligible component may not be part of the section 45X facility.

This clarification allows the use of subcomponents manufactured at a separate §48C facility without tainting the ability to qualify for a §45X credit, as long as the subcomponent is not part of the determination that the taxpayer is the producer of the eligible component.

The final regulations also added a specific rule to address §48C taints in a contract manufacturing arrangement - the tangible property determination for a 45X facility would apply to either party in the transaction, regardless of which party to the contract manufacturing arrangement is claiming the credit.

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Effective date

‍December 27, 2024

Applicability dates

‍As noted in § 1.45X–1(j), §1.45X–2(f), §1.45X–3(g), and §1.45X–4(d), these final regulations apply to eligible components for which production is completed and sales occur after December 31, 2022, and during taxable years ending on or after October 28, 2024.

Taxpayers may choose to apply these regulations to eligible components for which production is completed and sales occur after December 31, 2022, and during taxable years ending before October 28, 2024, provided that taxpayers follow these regulations in their entirety and in a consistent manner.

Additionally, §5.05(2) of Notice 2023–18 and §3 of Notice 2023–44, which relate to the interaction between §45X and §48C, are superseded for eligible components for which production is completed and sales occur after October 28, 2024.

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Appendix 1 — Additional technology-specific changes

Clarification on tandem cells

‍The final regulations addressed commenters concerns regarding disparate treatment between different types of tandem cells and the resulting capacity and credit amount. The Treasury Department and IRS agreed with commentators, and to prevent potentially incentivizing the development of certain tandem technology, added additional text for cells that are either mechanically stacked or using interconnected layers: “Where that cell is sold to a customer who will use it as the bottom cell in a tandem module, its capacity should be measured with the customer’s intended top cell placed between the bottom cell and the one-sun light source.”

Definition of "polymeric backsheet"

‍The final regulations clarify that the definition is limited to a sheet on the back of solar modules composed, at least in part, of a polymer, that acts as an electric insulator and protects the inner components of such module from the surrounding environment. This added definition for "polymeric" excludes most glass backsheets because they are typically not composed of a polymer, but of soda-lime glass.

Solar grade polysilicon measurement standards

‍The final rules added that satisfaction of the minimum purity requirement will be determined in accordance with the standards provided in SEMI Specification PV17-1012 Category 1. This standard also provides additional clarification by including guidance to distinguish between material and immaterial impurities.

Determining credits from related offshore wind vessels

‍§1.45X-3(c)(4)(ii) was revised to include the application of Federal income tax principles to determine inclusions and exclusions for the sales price used to calculate the §45X credit for offshore wind vessels.

Additional standards allowed to certify rated capacity of completed wind turbines

‍The final regulations revise proposed §1.45X-3(c)(6) to add both AWEA 9.1-2009 and ANSI/ACP 101-1-2021 as acceptable wind turbine certification standards.

Clarification to DC optimized microinverter systems

‍§1.45X-3(d)(5)(iv)(B) requires that the inverter and DC optimizer in the DC optimized inverter system to be produced and sold as a combined end product. The Treasury Department and the IRS retained this rule while also clarifying that the inverter and the DC optimizer do not need to be physically packaged together at sale, and the inverter and DC optimizer do not need to be fully interconnected and assembled at the time of sale.

No separate credit is created solely for a DC optimizer, and no changes were made to the number of inverter units used to compute the available credit amount, as these changes are beyond the authority of the Treasury Department and IRS.

Battery cell energy density requirements refer to volumetric energy density

‍When determining if a battery cell has an energy density of not less than 100 watt-hours per liter, the final regulations clarify that energy density is referring to volumetric energy density in §1.45X-3(e)(3)(i)(B) (e.g., as opposed to gravimetric, mass-based, energy density).

Clarification on modules using battery cells

Many commenters expressed concerns regarding the proposed regulations which would not have permitted a credit for the production of a module that is not the end-use configuration. Other commenters acknowledged that the proposed regulations could create confusion as the definition of battery module could potentially include items that are referred to in the industry as “battery packs.”

To address this confusion, §1.45X-3(e)(4)(i)(A) of the final regulations:

• Redefine an end-use configuration as “the product that ultimately serves a specified end use combines cells into a module such that any subsequent manufacturing is done to the module rather than to the cells individually”
• Clarify that “where multiple points in a supply chain may be eligible under this section, the first module produced and sold that meets the requirements of this section and the kilowatt-hour requirement in paragraph (e)(4)(i) of this section will be the only module eligible”

Clarification on modules not using battery cells for thermal and thermochemical battery technology

‍Taxpayers producing thermal and thermochemical battery modules with no battery cells must convert the energy storage to a kilowatt-hour basis, provide both the methodology and testing regarding this conversion, and maintain this testing as part of its books and records.

Additionally, the kilowatt-hour conversion cannot exceed the direct conversion of the total nameplate capacity of the thermal battery module to kilowatt-hours (the capacity that is sold to the consumer), and the taxpayer claiming the §45X credit must use the same methodology consistently, subject to any updated standard of the same methodology and testing, for all battery modules (with or without cells) sold in the taxpayer’s trade or business. The final regulations incorporate these clarifications in §1.45X-3(e)(4)(ii).

Additional guidance forthcoming for aluminum

‍As noted in the Summary of Comments and Explanation of Revisions, a number of comments were received regarding additional clarification for the definition of aluminum, and the Treasury Department and the IRS have determined that additional consideration is necessary prior to finalizing proposed §1.45X-(b)(1) with respect to this definition.

Appendix 2 — Additional contract manufacturing and relation person election changes

Additional critical minerals use case for contract manufacturing

‍The final regulations also added an additional contract manufacturing example to demonstrate a way to structure and claim a tax credit on initial extracting and refining activities that do not meet the minimum purity levels required for an eligible component until the initial materials are later purchased, completed, and sold.

Anti-abuse rule measured at point of sale for Related Person Election

‍The final regulations added a clarification regarding defects with regard to a related person election. If an eligible component is not defective at the time of sale, defects arising after the point of sale may occur in the ordinary course of a business and do not generally raise the improper claim concerns regarding defective components.

Appendix 3 — Select items upheld in final regulations

Confirmation of the scope for domestic production and use

‍The final regulations adopted the proposed rules that require eligible components to be produced within the United States, whereas constituent elements, materials, and subcomponents used in the production of the eligible components are not subject to a domestic production requirement.

In addition, the eligible components do not ultimately have to be used in the United States for §45X eligibility.

Production efforts required to stack or claim additional credits for integral components that are also eligible components

‍The final regulations upheld the temporary regulations perspective that a taxpayer must produce (rather than merely purchase or acquire) an eligible component that it then integrates, incorporates, or assembles into another eligible component that is then sold to an unrelated person in order to claim credits on both components.

No additional credits for defective units that are subsequently replaced

‍A commenter proposed that eligible components that were used to replace defective units pursuant to a contractual obligation do not appear to violate proposed anti-abuse provisions. However, the final regulations confirmed the replacement of a defective unit does not represent a new sale to an unrelated person, and §45X does not incentivize the production of two eligible components related to a single sales transaction.

Rejection to expand eligible components and applicable critical minerals

‍Commenters requested to expand the list of eligible components and applicable critical minerals, but the Treasury Department and the IRS declined, citing the lack of statutory authority to expand the list.

Rejection of proposed safe harbor for contract manufacturing arrangements

‍The Treasury Department and the IRS declined a commenter’s request to establish a safe harbor for contract manufacturing agreements in place before the applicability date of the proposed regulations.

However, a taxpayer may still elect to apply the special rule (§1.45X-1(c)(3)(iii)), which allows the parties of a contract manufacturing arrangement to agree on which party to the contract will claim the credit.

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Drawing on over $10B of verified transactions, our report takes a deep dive on the Section 48 investment tax credit, Section 45 production tax credit, and Section 45X advanced manufacturing production credit. We also examine emerging market trends and deal dynamics.

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Participants in the initial wave of tax credit transfer transactions filed their returns reflecting those deals on October 15, marking another milestone for the Inflation Reduction Act’s experiment in tax credit transfers. At least for some credit buyers, the tax system is inching closer to the inevitable: audits.

At least for some credit buyers, the tax system is inching closer to the inevitable: audits.

In the due diligence they performed before the transfers, participants began preparing for examinations. The diligence process for tax credit transfers will likely always be at least partly customized to the parties because different entities have different concerns, but a more standardized roadmap has emerged over the past year or so as advisers and tax credit buyers and sellers gained experience.

Doing Your Homework

The basic outlines of the diligence process were informed in part by the precursor to transfers — tax equity. But the IRA clearly conceived of a transfer as a far simpler transaction, and accordingly they require less diligence. Consensus among buyers and sellers about how much less has evolved over time. The natural processes of maturation and acceptance of common diligence practices have made negotiations over due diligence more streamlined, said David Burton of Norton Rose Fulbright US LLP. “Now there are typically only a handful of issues to negotiate,” he said, adding that some buyers still do more due diligence than they need to out of an abundance of caution.

The due diligence required for a transfer is focused on ensuring that the project can continue to operate economically in order to avoid a recapture event or a disallowance of credits, said Billy Lee of Reunion, an energy tax credit marketplace. Unlike in tax equity and secured financing deals, investor returns aren’t dependent on cash flows of the project in transfers, hence less diligence. The relative simplicity of transfers is a large part of their appeal. “Transferees want to buy credits and never think about them again — that’s an ideal outcome of a tax credit purchase,” Lee noted. However, there are several areas where the tax credit buyer is exposed to some operational risk: avoiding recapture and complying with the prevailing wage and apprenticeship requirements.

Some deals require the seller to provide an annual compliance certificate to the buyer, but avoiding recapture and complying with the labor requirements are largely the project developer’s purview. Recapture, a scary possibility for transferees because it has high consequence, is very unlikely to happen, Lee said. If it does, the developer must notify the buyer so they can reflect that on their tax return and seek indemnification or make an insurance claim. Typical transfer agreements require transferors to comply with the prevailing wage and apprenticeship rules for alterations and repairs.

Prospective credit buyers and sellers increasingly try to ensure that the information they need for due diligence is prepared and vetted as they go into negotiations, said Anand Chaturvedi of Dili. Chaturvedi’s company automates the data and file processing that has traditionally been done manually in the due diligence stage of transactions and provides diligence reports that are based on complete data, rather than sampling, to identify risks. Chaturvedi added that collecting and processing diligence information before negotiations not only makes them go more smoothly but also helps to ensure that the data is available for a later examination by the IRS. “Part of our involvement in these deals is to make all of the documentation as robust as possible for audit,” he said.

Market Maturation

Due diligence may never be fully uniform for all transactions, but as the number of completed deals climbs, the process has become more efficient. “There is now a better appreciation for the scope of diligence on both sides. Buyers understand that they don’t need everything, and sellers understand that they can’t get away with providing nothing, or even the bare minimum,” Lee said. As a result, there are fewer disagreements in investment tax credit transfer negotiations over the scope of due diligence because it’s generally accepted what buyers and sellers need to be confident about the transaction, he said. Debate is more likely regarding due diligence for newer credits that have fewer precedent transactions, such as the section 45X advanced manufacturing production credit.

A handful of areas remain where buyers and sellers don’t always see eye to eye. Buyers sometimes ask for an independent engineer’s report. Sellers tend to argue that those reports are unnecessary for transfers, because the purchase takes place after the credits have accrued, Burton explained. Some buyers also seek corporate enforceability opinions. In addition, tax opinions are not part of every deal. Burton said that over half of his firm’s transfer deals through mid-October had no tax opinion condition precedent. The market appears to consider a good indemnity agreement a sufficient precaution.

The Required Minimum Is Not Enough

The final transfer regulations (T.D. 9993) outline the required minimum documentation that an eligible taxpayer must provide to a transferee, and some sellers initially sought to provide transferees with only that minimum. Advisers quickly pointed out that “minimum” was not equivalent to “recommended.” The preamble to the final rules notes:

In providing for the required minimum documentation that an eligible taxpayer must provide to a transferee taxpayer, the intention was to require a baseline of information that is necessary for validating an eligible taxpayer’s claim of eligibility to an eligible credit, while not overburdening the eligible taxpayer with production requirements or altering the arm’s length arrangement between the parties.

But the preamble also explains that an objective of the rules was to allow “sufficient flexibility for market participants to determine if more information is necessary in a particular transaction,” and it suggests that agreements between taxpayers might go beyond the minimum requirements.

The final transfer regs also include in reg. section 1.6418-5(a)(4) a list of circumstances that may indicate reasonable cause for avoiding an excessive credit transfer tax. Those include review of the seller’s records regarding the determination of the eligible credit, reasonable reliance on third-party expert reports, reasonable reliance on representations from the seller, and review of audited financial statements. The list also helped to frame the standard scope of diligence.

Advisers quickly pointed out that ‘minimum’ was not equivalent to ‘recommended.’

Standard diligence for ITC transfers includes the cost segregation report, placed in service substantiation, appropriate insurance coverage, seller credit analysis, prevailing wage compliance, and basic parameters indicating that the project has the right and ability to operate. The validity of any bonus credits must also be covered. If there is a step-up transaction, an appraisal is needed, Lee said. “Our due diligence effort is comprehensive, but efficient — we try to hit all the points that are salient to make sure that credit buyers have everything they need to get comfortable and defend their position if there is a challenge down the line,” he said.

Looking Ahead to Audits

Planning ahead for an audit means anticipating the questions that the IRS will ask on information document requests and collecting that information in advance.

“Typically the purchasers want to do enough diligence that they feel comfortable that even if there is an audit, there’s a complete and substantive file they can point to,” Lee said. Buyers typically also agree with the seller stating that the seller can be involved and allowed to participate in an audit, Lee said. Similarly, if there’s indemnity, the seller is given the right to consent to any settlements, and where insurance policies exist the buyer also provides the insurer with audit participation and settlement consent rights. “An audit is going to be a collaborative exercise,” particularly because there is not typically a way to allow the buyer to transfer an audit to the seller,” Lee said.

One way to reduce the risks that worry buyers and insurers is for sellers to show that they have a strong program for ongoing compliance or reporting, Chaturvedi said. “For alterations and repairs, the project developer needs to continue to pay prevailing wages and also give confidence to their insurer or credit buyer that those compliance rules are being met,” he said.

Recording

Key topics

• 1:22 – "What's New" with Keith Martin of Norton Rose Fulbright
• 20:31 – Tax credit pricing
• 24:50 – Tax credit market size
• 25:30 – Emerging deal terms and dynamics
• 29:52 – Market participants
• 31:52 – Tax credit insurance
• 34:37 – Audience Q&A

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Special guest, Keith Martin of Norton Rose Fulbright

Keith Martin is a tax lawyer in the Washington office of Norton Rose Fulbright who has helped lead the project finance group at the firm for more than 25 years. The group did $211 billion in project financings and closed 448 significant transactions in the last four years. It closed 57 large tax credit sales in the last year involving more than $6 billion in tax credits. Keith worked for 258 companies last year on numerous transactions. He also lobbies the US Treasury and Congress on policy issues. The Chambers directory gives him its sole "star" ranking among US renewable energy lawyers.

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Download Reunion's tax credit pricing and market trends report

Can't attend the webinar? Download our Q3 report now.

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About Reunion

Reunion facilitates the purchase and sale of clean energy tax credits. So far in 2024, Reunion has worked with major corporations to acquire over $2.5 billion in tax credits from solar, wind, storage, advanced manufacturing, and other clean energy projects.

Our curated marketplace features billions of dollars of high quality tax credit opportunities, and 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.

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Transferable tax credit pricing has increased in the latter half of 2024, particularly for large, "clean" ITCs

The increase in pricing reflects a seasonal supply-demand imbalance caused by the following:

• Corporate taxpayers have a firm and clear estimate of their 2024 tax liability, and many new tax credit buyers have stepped into the market. They are now scrambling to find credits to offset that liability
• The supply of 2024 credits, particularly large credit volumes, have dwindled given the amount of transaction activity throughout the year

We expect pricing for 2024 credits to remain inflated through the end of the year and into 2025. This intra year supply-demand imbalance was also observed in 2023.

While pricing has increased across all credit types, the most marked increase has been with large, straightforward ITC projects. For most of the year, these opportunities traded in the $0.92 to $0.93 range, but as of Q3 we are seeing buyers bid $0.94 or even $0.95. The spread between ITCs and production credits (§45 PTCs and §45X AMPCs) has narrowed considerably.

Sellers have started marketing high quality 2025 tax credit opportunities and are actively seeking buyer commitments. We believe that buyers that are willing to shop now for 2025 credits will be able to access a wide range of credit opportunities, with less competition.

We have also observed sellers running competitive RFP processes, and are receiving multiple bids – in some cases, upwards of ten qualified bids. Examples of projects that have received multiple bids with high valuations:

• $130M solar ITC from an investment grade seller, exempt from prevailing wage requirements
• $150M solar and storage ITC from a reputable seller with a very strong balance sheet. No step-up in cost basis and exempt from PWA requirements

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Corporate buyers should develop their 2025 tax credit acquisition strategy now to avoid the late-year credit frenzy

Reunion is seeing an increasing number of high quality sellers marketing their 2025 projects now and placing tight deadlines on accepting bids. Even though pricing may not be optimal due to a lower number of buyers ready to look at 2025 credits, these sellers want to put a tax credit purchase agreement in place so they can obtain a bridge loan against their tax credit commitments.

Buyers who are able to commit to 2025 credits now will get access to a wider selection of project opportunities, and potentially better pricing, as only a subset of buyers have enough visibility into 2025 tax liabilities to be able to commit early. They’ll also avoid “chasing credits” in the latter-half of 2025.

Buyers who are able to execute tax credit transfer agreements now have a significant advantage

For buyers with uncertainty around their tax liability, one option is to initially target a purchase volume that is significantly lower (e.g., 50%) than projected tax liability. The buyer can purchase additional tranches of credits later in 2025 as their tax position becomes more clear. (We previously discussed the strategy of topping up on credits.) Purchasing tranches of credits to “top up” also carry the benefit of less competition for smaller credits, resulting in potentially better pricing.

Buyers who are willing to go slightly out of pocket will also be in an advantageous position

A majority of corporate tax credit buyers do not want to go “out of pocket” to acquire clean energy tax credits, preferring to align tax credit purchases with their quarterly estimated tax payments. Typically, the internal approval process for a cost savings effort (e.g., paying a clean energy developer $95M in lieu of paying $100M to the IRS, at approximately the same time) is easier than requesting an out-of-pocket investment to buy credits that generate tax savings in the future. 

Buyers who are willing to go slightly “out of pocket” — for example, willingness to pay for an ITC in Q1, Q2, or even Q3 — will enjoy a less competition, and a larger discount to compensate for timing of payment. These out-of-pocket investments can present attractive economics to buyers, with IRRs over 20%. 

We can see this in a sample $100M ITC purchase from a project that will be placed in service in Q1 2024. Let’s assume a buyer and seller execute a tax credit transfer agreement in Q4 2024 (11/15/2024) for a utility-scale solar project that is expected to be placed in service in Q1 2024 (3/15/2024). If the buyer agrees to pay for the credits as soon as the project is placed in service, they could reasonably expect to pay $0.93, as they will essentially be “pre-paying” their taxes in Q1 and will get the benefit of the tax offset during their quarterly estimated tax payment dates.

Even though the buyer goes out of pocket in this scenario, the investment generates an attractive 20.3% IRR and $7.0M tax savings.

Consider smaller projects for better economics 

Buyers and sellers want as few counterparties as possible. If a buyer has a $160M tax credit appetite, they want to find one project as close to a $160M as possible.  

Focusing on a single, large transaction, however, can present challenging economics because as we noted, there are many large taxpayers that all want to find a large, straightforward transaction.

Simply moving from a single transaction of $100M to three transactions of $30M can meaningfully improve deal economics without necessarily adding undue risk or complexity. Through Q3 2024, for example, smaller 45X AMPCs deals priced approximately a cent below larger 45X AMPCs deals.

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Set expectations with internal stakeholders on pricing dynamics for 2024 credits

Companies looking to pursue sizable 2024 ITC opportunities should expect credits to trade at a premium. Buyers should set expectations to bid $0.94, $0.95, or even slightly higher to win the most coveted opportunities. 

Additional 2024 credit opportunities will arise as the year draws to a close, and we also predict that additional opportunities will arise shortly after January 1. What we observed last year is that a number of tax credit sellers were not sure if their ITCs would be placed in service in the current year or the subsequent year, so they waited until they had certainty on the tax credit year (i.e., after January 1) to market their credits. That said, we predict that a large number of tax credit buyers will continue to compete over these 2024 credits, particularly for larger opportunities.

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Companies should start evaluating 2025 clean energy tax credit investments now

Corporations who are comfortable with their 2025 tax liability and are willing to go a bit out of pocket should begin shifting their attention to 2025. Q4 2024 is a good time to lock in some of the most attractive 2025 deals, particularly for larger ITC, PTC, and AMPC opportunities.

Our transactions team would be happy to assemble indicative cashflow scenarios. Contact us today.

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San Francisco, Sept. 24, 2024 /PRNewswire/ — Reunion, a leading clean energy finance company, today announced that it has facilitated the purchase and sale of over $1.6 billion in clean energy tax credits through Q3 2024.

Drawing on decades of clean energy financing experience, Reunion has transacted across a range of transferable tax credits – §48 ITCs, §45 PTCs, §45X AMPCs, and §30C alternative fuel infrastructure credits – and technologies. "Our team has facilitated dozens of tax credit transfers involving established clean energy technologies, like solar, wind, and battery storage, as well as emerging technologies, like biogas, fuel cells, and EV charging," said Reunion's president, Billy Lee. "Advanced manufacturing and critical minerals, however, have been the largest areas of growth for us. We've executed §45X transactions from $10M to well over $500M."

Reunion recently published a study that estimates the size of the transferable tax credit market, and quantified the total credit market by monetization strategy (transfer, direct pay, retention and transfer). We estimate that over $45B in clean energy tax credits will be generated in 2024. Of this total, Reunion estimates that approximately $21B to $24B will be transferred – a significant increase from the $5B to $7B in transfers Reunion estimated in 2023.

"At the end of 2023, many buyers were hesitant to be 'first to market.' A year later, however, the vast majority of corporate finance and tax leaders are aware of clean energy tax credits, and we are seeing significant demand for high quality opportunities," said Reunion's CEO, Andy Moon. "We are thrilled to see corporations across many industries invest in transferable tax credits."

The influx of new buyers and sellers has created a fast-moving market. When working with Reunion, typical transaction timelines have fallen from over 90 days in Q4 2023, to less than 45 days in Q3 2024.

About Reunion

Reunion facilitates the purchase and sale of clean energy tax credits, and has worked with major corporations to purchase over $1.6 billion in tax credits from solar, wind, storage, advanced manufacturing, and other clean energy projects. Our curated marketplace features billions of dollars in high quality tax credit opportunities, and 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.

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