Today, Crux published our inaugural report on the market for lending and certain equity investments in energy and manufacturing projects. The report is based on a survey of lenders and investors representing more than $225 billion in total capital allocation to energy and manufacturing projects — from pre-NTP capital to preferred equity and hybrid tax equity.
The report provides visibility into current market conditions, capital costs, and capital availability — critical insights at a time when the US is experiencing a surge in demand for new electric generating capacity and domestic manufacturing. Read the report’s key findings below.
Capital is most widely available for solar and storage projects. Nearly all investors at all stages of the development process indicated that solar was a technology that they invest in. This is a stark contrast from less established technologies such as advanced manufacturing, biofuels, carbon capture, and nuclear, which have historically faced challenges accessing debt financing.
However, in recent years, more lenders are increasingly looking to provide capital to these novel technology projects. This openness is supported by the robust and progressively more liquid market for transferable tax credits.
Availability of capital does vary based on technology, strength of sponsor, and contracted offtake.
Tax credit bridge loans are a critical financing tool for projects seeking to pull forward the value of their future tax credits. The terms available for these loans are largely driven by factors such as advance rates, the presence of a committed investment-grade tax credit buyer, and other project/sponsor characteristics.
Tax equity structures have evolved to hybrid structures, or T-flips, which explicitly contemplate the sale of a portion of tax credits in the transfer market. These structures made up about 60% of the tax equity committed in 2024, and that share is expected to rise. Preferred equity structures are also emerging and typically anticipate most or all of the tax credits being transferred.
The availability and structure of these options can influence a project’s overall capital requirements and are important to consider during structuring.
However, the data indicates a smaller but meaningful group of lenders is open to merchant or partially contracted projects. While more than 70% of investors indicated that they were more willing to invest in a fully contracted project, some lenders view merchant or partially contracted projects as a better fit for their return requirements.
To do so, however, capital markets require a stable and constructive policy environment. Policy volatility is unconstructive for risk-averse project finance lenders and is likely to disrupt investment. This effect is particularly concentrated in newer technologies, such as nuclear, manufacturing, and biofuels.
Whether the market continues its cycle of expansion or recoils back to the most well-established wind and solar projects will be a function of ongoing political processes.
For more insights and data on the lending market, download the full report.
