$633 Billion

That's a lot of money and it's being channeled into investments in clean energy in the form of tax credits. Those credits will be followed by even more private investments in the sector, likely to grow to multiple trillions of dollars over the next decade. The money will go to solar, wind, clean hydrogen, and carbon-capture projects. These credits have been extended and expanded under the Inflation Reduction Act. A significant aspect are the new rules for transferability of the tax credits as described in the Federal Register.

It used to be that only large entities with significant tax burdens could engage in solar energy tax credit deals. This is due to the complexity of the business and legal structures required to implement the tax credit transfers. While that path is still available, we now have a much easier way for smaller players to gain the advantage of clean energy tax credits. Around 80% of project developers expect to use transferability in their new or upcoming projects so it will be a big market driver.

The key components of transferability include

The transferability provision allows businesses to transfer “all or a portion of any of” 11 clean energy tax credits to a third party in exchange for tax-free cash, Treasury said, “so that businesses can take advantage of tax incentives if they do not have sufficient tax liability to fully utilize the credits themselves.”

Transferability allows businesses to transfer tax credits third parties in exchange for cash or investment. This applies to 11 clean energy tax credits:

1. 30C alternative fuel refueling property credit
2. Section 45 renewable electricity production credit
3. 45Q carbon oxide sequestration credit
4. 45U zero-emission nuclear power production credit
5. 45V clean hydrogen production credit
6. 45X advanced manufacturing production credit
7. 45Y clean energy production credit
8. 45Z clean fuel production credit
9. Section 48 energy credit
10. 48C qualifying advanced energy project credit
11. 48E clean electricity investment credit

At ZeroHero we are watching this closely as this massive will create thousands of new jobs over the next 10 years.