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Using Tax Insurance to Facilitate Renewable Energy Project Finance Transactions

02/04/2025

The US federal government has long supported alternative energy through financial incentives like grants and tax credits. The Inflation Reduction Act of 2022 (IRA) is a game-changer, allocating approximately $369 billion over a decade to accelerate the shift from fossil fuels to renewable energy. This has expanded the Investment Tax Credit (ITC) and Production Tax Credit (PTC), driving rapid growth in clean energy projects and attracting new investors.

One key financing method in this space is tax equity investment, where financial institutions partner with developers to fund projects in exchange for tax benefits and cash flows. The IRA also introduced “Transferability,” allowing project owners to sell tax credits for cash, opening new avenues for monetizing tax benefits.

However, these transactions come with challenges, such as sponsor credit quality and counterparty risk. Tax liability insurance can play a crucial role in mitigating these risks, making renewable energy project finance more accessible and secure.

Check out our latest PDF overview to learn how tax liability insurance can facilitate renewable energy project finance transactions and overcome common hurdles.

Read the piece here.

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