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How can Project Developers sell their tax credits?

Background

Historically, federal tax credits technically have not been transferable. This meant that for those project developers without any tax liability, if their tax credits were not refundable, some of their tax credits would be worthless. 

The Inflation Reduction Act (IRA), passed in 2022, included a new provision that allows businesses to sell eligible clean energy tax credits for cash to a third-party business. Selling the transferable tax credits (TTCs) are a new way for renewable energy project owners to monetize their credits and is an alternative to complex tax equity partnerships. 

As the number of renewable energy projects continues to grow, this creates more financing options for projects and allows businesses in all sectors to buy tax credits to support clean energy while reducing their tax liability. It’s a win-win for all companies and helps accelerate the renewable energy industry. 

‍Steps to Selling Your Tax Credits 

1) Check to ensure your credits are eligible 

Any business that has generated certain tax credits under the IRA 2022 can sell tax credits. Currently, 11 green energy tax credits are eligible for transferability. 

Section 30C credit for alternative fuel refueling property

Section 45 renewable energy production credit (PTC)

Section 45Q carbon capture credit

Section 45U zero-emission nuclear power production credit

Section 45V clean hydrogen production credit

Section 45X advanced manufacturing production credit

Section 45Y clean electricity production credit

Section 45Z clean fuel production credit

Section 48 energy investment tax credit (ITC)

Section 48C qualifying advanced energy project credit

Section 48E clean electricity investment credit

More detail on the eligible credits can be found at 6418(f)(1)(A).

2) Research marketplace partners

Although you can try to find a buyer and transact independently, it most likely is not worth your time, energy, or money. We recommend working with a marketplace partner such as Atheva.

What to consider when evaluating your options:

  • Focus: who does the marketplace service? Are your needs top of mind? 
  • Process: do they have templates, a deal room, and other technology to help streamline the transaction? 
  • Team: do they have the right expertise? Are they willing to help support you throughout the entire transaction? 
  • Fee: most marketplaces charge between 1-3% for a transaction fee (paid by seller). Does their fee structure provide you the best net outcome and pricing ranges to attract buyers?

 

3) List your credits on the marketplace 

Once you select your preferred partner, you can list your credit(s) on their marketplace. Some marketplaces don’t have exclusivity clauses, so you have the flexibility, if you choose, to list in multiple marketplaces. But, that may require more work and ongoing management on your end. 

At Atheva, once your credits are listed, you can sit back, relax, and let us manage the matching and deal process.

  • Be matched with compatible buyers
  • Get your target price
  • Access lender and insurance options 
  • Transact with ease with streamlined process
  • Connect with repeat buyers

Project developers are the #1 focus at Atheva. We’re here to make it easy and provide them the best net outcome, which is why we stand by having the lowest transaction fee on the market (1%). From small to large credits, we’re your reliable partner to support your ongoing project financing.

Learn more or get started today — contact us!

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