Can IRA Tax Credits Pay for Your Renewable Energy Goals?

Tax credits are probably the best-known secret and least optimized tool in a corporate tax professional’s toolkit. Every tax season, companies hope their tax professional is finding every deduction and cost saving available, but are they looking at the ones passed in federal sustainability legislation?

The Inflation Reduction Act (IRA) of 2022 was passed to inject hundreds of billions of dollars into the economy by using federal tax credits to democratize and increase funding toward the US green energy transition. Currently tens of billions of dollars have been deployed, with over a trillion dollars expected in transactions over the next ten years.

Awarded to developers building solar and wind projects, these credits can now be transferred to third parties with greater tax liability, allowing project developers to recoup cash once their projects are complete. As these projects are pre-revenue, developers often sell transferable tax credits for less than their full value.

Companies of all sizes are using IRA Section 48. Some firms reduce tax liability by $1-5 million; others exceed $100 million. Those who understand the value and limited risk of these credits gain working capital, boost net profits, and enhance their sustainability brand.

Kill Two Birds With One Stone

Sustainability teams aim to advance sustainability goals cost-effectively, while tax departments focus on maximizing savings. What if you could leverage federal tax incentives to fund renewable energy procurement plans? By optimizing incentives and collaborating across departments, an organization can meet sustainability objectives while reducing costs.

Here’s how it works:

Companies can start doing double duty with IRC Section 48 tax credits. Buying tax credits, whether $5 M or $500 M, directly promotes renewable energy development and additionality while freeing up working capital for internal sustainability goals.

Why Section 48 Credits Can Be a Game-Changer

• They enable project developers to receive compensation even before revenue is generated.
• They unlock capital for companies by converting future tax savings into current cash.
• They strengthen sustainability credentials by aligning financial and environmental goals.

How STRIVE by STX Supports Your IRA Strategy

STRIVE by STX helps organizations understand and execute strategies around transferable tax credits. We can assist you in:

• Evaluating how IRA Section 48 applies to your renewable energy projects
• Structuring transactions to maximize value and mitigate risk
• Aligning these credits with your sustainability plans

Contact us to explore how IRA tax credits can support your renewable energy ambitions.

Interested or have any questions?