Tax Credit Commerce
The market for clean-energy tax credits is flourishing.
The Inflation Reduction Act opened a new avenue for renewable-energy developers to access funding by selling the tax credits they are unable to absorb themselves. Transactions are estimated to be worth between $7 billion and $9 billion and expected to rise more, according to estimates by online tax credit marketplace Crux.
The tax credit transfer program was created as an opportunity for corporations to reduce their tax liabilities while supporting green initiatives. But since clean energy companies often don’t generate enough profit to absorb the tax credits they qualify for, lawmakers enabled businesses to monetize those tax credits by selling them to corporate buyers.
Businesses can purchase the credits for $90 to $96 while reducing their tax liability by $100, creating a profit.
Some 100 renewable energy companies overseeing over 1,000 projects are looking to sell their excess tax credits in this new market.
Unlike the complex and limited tax equity market, which is often accessible only to the largest renewable developers, this new system makes funding more accessible, while incentivizing major corporations to fund clean energy projects.
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