Today, Crux published our inaugural Transferable Tax credit Market Intelligence Report. The report unpacks market sentiment across a diverse range of participants, details trends from completed deals, and shares insight into 2024 market expectations. Data in the report is derived from an unprecedented market survey conducted in November and December of 2023 and augmented by public announcements and Crux platform data.
In total, this report reflects information collected from more than $3.5 billion in 2023 transferable tax credit transactions. We estimate the dataset covers between one third and one half of the market for transferable credits in 2023 on the basis that total deal value will likely reach $7-9 billion.
While tax credit transferability went into effect in January 2023, very few transactions occurred until mid-June when Treasury published draft guidance offering clarity to prospective participants. In the second half of the year, transactions rapidly accelerated, with new tax credit buyers, sellers, and intermediaries entering the energy tax credit market for the first time. They were motivated by the opportunity to manage tax liabilities, receive essential investments, and scale syndication and advisory businesses, all while supporting sustainability goals and clean energy development.
The report provides a case study on LIHTC credits to show that average pricing in this new market already exceeds current observed pricing in credits associated with that 37-year-old program.
Since the passage of the IRA in August 2022, private companies have announced over $628 billion in commitments to American industries like clean energy manufacturing, electric vehicles, and clean power. Rhodium Group recently reported that investments in clean energy and transportation in the US reached a record $64 billion in Q3 2023, a 42% increase compared to the same period last year.
We are just beginning to see what this new market has to offer and the impact of the investments into critical clean energy projects.
Crux is the ecosystem for developers, tax credit buyers, and intermediaries (including banks, syndicators, tax advisors, and more) to transact and manage transferable tax credits. The Crux platform helps all parties streamline the transaction process, access a large and liquid market, and manage risk – offering market transparency and facilitating more transactions that achieve financial goals and accelerate the energy transition.
Our mission is to make sustainable finance more efficient and interconnected because we know that transferable tax credits are a key catalyst to the energy transition. The report finds that 70% of sellers believe a lack of transparency is an obstacle to the rapid evolution of an efficient market. We’ve heard this theme consistently since the earliest days of this program. Market transparency will lead to competition and liquidity, which in turn leads to growth and market efficiency.
Download the full report below, and get in touch with us today if you’re ready to learn more about how Crux can help your business take advantage of clean energy tax credit transferability.
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