Introducing ITC Transfers
What’s new?
Conductor Solar now supports ITC Transfers for C&I and community solar projects! Building on the success of our marketplace for PPA and lease financing, we’ve created a marketplace for developers and EPCs to facilitate tax credit transfers for their customers’ projects and to directly sell tax credits for projects that they want to own and operate.
What is an ITC transfer?
The Inflation Reduction Act of 2022 included a provision allowing a transfer of the federal Investment Tax Credit (ITC). Previously, monetizing the ITC often required wither a) a certain type of tax liability, or more commonly, b) a complicated tax equity legal structure. While it’s still challenging for many to use ITCs, solar owners can now sell their federal tax credits to tax credit buyers via a much simpler structure - a one time transfer (purchase and sale).
How does Conductor help?
Conductor connects developers and EPCs with interested buyers and provides a suite of software tools and legal documents to facilitate the transaction. The software organizes project information to support pricing, diligence, and closing. And the recommended documents offer both parties a template for the term sheet and purchase and sale agreement for the transfer. We created the recommended documents in collaboration with a top tier law firm that is annually involved in the finance and sale of approximately 15 Gigawatts of renewable energy.
How will this impact the market?
We expect ITC transfers to unlock financing for a large number of new C&I solar projects with project values ranging from $50k to $10M per project. For-profit companies with limited tax liability can now consider solar energy system ownership as a viable option. This is true for both customers seeking to own their own systems and for developers seeking to provide PPAs and leases to their customers.
What about nonprofits and governments?
Nonprofits and governments don’t need to transfer ITCs because they can get paid directly by the IRS. This “direct pay” option allows these organizations that don’t pay federal taxes to receive cash from the IRS for the value of their ITCs. We are expecting these payments to come through after projects get built, so there may still be a financing need during the construction period along with any financing required for the remaining value of the system.
Tell me more
For more information, see our coverage of the Inflation Reduction Act:
