In recent weeks, we’ve discussed what to expect to encounter in a first transaction and a timeline for a transaction in transferable tax credits.
This market is new and evolving in real time, so our team is motivated to share our experiences with developers to help inform their decision making. The best way to study this market, however, is to test it themselves, assessing buyer preferences for key components — like price, terms, and timing — before committing to a path forward.
Transferability has opened up a much wider market of potential buyers, providing a substantial benefit: it offers project developers the chance to look at a broader pool of potential partners, obtain competitive pricing for their credits, and optimize deal parameters to meet a developer’s needs.
Optimizing value for tax credits is about more than price. We know that developers care about several key parameters when monetizing their tax credits, such as:
We increasingly see developers running competitive sales processes to optimize on these variables, but managing these processes manually can be time intensive for busy teams. Some developers have resorted to working with repeat buyers to avoid concerns about confidentiality and to optimize for transaction certainty. This is not always possible, and without testing the broader market, developers may also be sacrificing on price.
This new market requires a new go-to-market strategy. Developers who anticipate having credits for sale in 2024 and beyond should test the market early. Putting feelers out to assess market appetite and price for tax credits is a low risk process. Developers should:
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With diversified non-binding bids and more clarity into market pricing for their credits, project developers have more and better information to support and guide future financing decisions. Developers may not know from the start if they’ll monetize credits through transferability, tax equity partnership, or a more complex joint venture structure. The most accurate way to gauge the market and make that decision is by testing it themselves.
Developers on the Crux platform can list their projects in less than 10 minutes with no fees and no exclusivity commitment required. Our software is designed to maintain confidentiality, and sellers need not have every detail hammered out before taking stock of the market. Finally, project developers can receive non-binding indications of interest from prospective credit buyers across the widest cross-section of the market on Crux. From there, they are better informed to choose a path forward and get organized for the next steps of a transaction.
In addition to greater price transparency, developers are exposed to new potential partners and relationships through their interactions with buyers, intermediaries, and buyer advisors in the Crux ecosystem. Our sophisticated market team can support this process through introductions to leading insurers, attorneys, and other service providers, and can advise developers through running a sales process to solicit bids for their tax credits. We work closely with our developer partners to understand their projects and help them solicit bids.
To begin exploring the market, and get in touch with us today.
November 22, 2024
The market for energy and manufacturing tax credits has seen immense growth in 2024, leading to increased competition. Sellers have more choices, so standing out is imperative for tax credit buyers. Crux has identified several ways that buyers can help differentiate themselves and win in a competitive process.
Read MoreOctober 11, 2024
Experts from the law firm Vinson & Elkins partner with Crux to prepare a detailed guide to the IRS's pre-filing registration portal. Learn how to access the portal to register transferable tax credits generated by eligible projects and facilities, as well as how to properly account for transfers in the context of tax filings.
Read MoreOctober 2, 2024
Beginning in 2025, clean energy projects have access to the new 48E clean electricity Investment Tax Credit and 45Y clean electricity Production Tax Credit. The legacy Section 48 ITC and Section 45 PTC credits will no longer be available to projects that start construction after December 31, 2024, and will instead be replaced by the tech-neutral tax credits. Going forward, developers of new projects need to understand the details of the new tax credits, and tax credit buyers should understand the different qualification parameters under the tech-neutral tax credit regulations.
Read More