Tax Credit transferability
What is Transferability?
Tax credit transferability refers to the sale of clean energy federal income tax credits. (See Tax Credit Types). A tax credit can only be sold and transferred one time under the governing regulations.
Typical parties in a tax credit transfer transaction include (i) a project developer that generates tax credits but lacks sufficient tax liability to use them and (ii) an investor with sufficient tax appetite to acquire and monetize the tax credits. The tax credits are sold at a discount, which is one of the key reasons investors pursue these types of transactions.
See the accompanying example of a tax investor considering whether to acquire $10 million in tax credits.
The Market is Proven and Booming
Since tax credit transferability became available in 2023, the market for transferable clean energy tax credits has grown rapidly, with tens of billions of dollars of credits transacted annually across a broad range of buyers, including many corporations, since they are typically best positioned to utilize the tax credits. (See buyer eligibility details under FAQ). More than 25% of Fortune 1000 companies purchase transferable tax credits.
Transferability has unlocked tremendous opportunity for developers who have been unable to access the limited amount of tax equity investment available in the market as well as new corporate tax investors that wish to earn a significant economic return while supporting renewable energy development.
The Regulatory Environment is Supportive
Transferability was established through Internal Revenue Code Section 6418, which was enacted as part of the Inflation Reduction Act of 2022 ("IRA"), one of the most impactful clean energy laws in United States history. Prior to the passing of the IRA, the use of the tax credits was limited to the owners of the projects. As a result, project developers who were unable to monetize project tax credits themselves would co-own the projects with tax investors through highly complex tax equity partnerships.
In 2025, the One Big Beautiful Bill Act ("OBBBA") was passed and introduced sunset schedules for the eligibility of tax credits generated in connection with select technologies. In response, affected project developers have taken proactive steps that, under law, will grandfather future projects to generate a vast supply of tax credits for several years to come.