The Biden administration finalized regulations Thursday for a provision under Democrats’ climate law allowing the transfer of tax credits and reshaping financing structures for clean energy projects.
The Inflation Reduction Act created new credit monetization provisions meant to expand the pool of companies and entities that can take advantage of the clean energy tax credits under the law, while also incentivizing more private-sector capital to flow to projects.
The provision allows project owners and developers to monetize certain tax credits by transferring them to other taxpayers for cash — simplifying how clean energy projects are financed.
The industry has long relied on tax equity, where developers with limited tax liability look to banks to generate the capital needed to build projects — a complex structure that limited the scope of who could utilize renewable energy tax credits.
