FINANCING ENERGY TRANSITION: THE NUTS AND BOLTS OF TAX EQUITY FINANCING IN THE U.S. RENEWABLE ENERGY LANDSCAPE AND ITS FUTURE OUTLOOK
DOI:
https://doi.org/10.25170/paradigma.v10i1.7151Keywords:
Renewable Energy Financing, Inflation Reduction Act 2022, Tax Credits (ITC & PTC), Tax Equity StructuresAbstract
Financing remains one of the biggest hurdles in the United States' transition to renewable
energy, especially as clean energy projects often carry higher upfront costs than fossil fuels. To
close this gap, developers rely heavily on government incentives like the Investment Tax Credit
(ITC) and Production Tax Credit (PTC), often through tax equity financing structures. This
paper explores how the Inflation Reduction Act 2022 has reshaped the renewable energy
financing landscape, expanding access to tax credits, introducing transferability, and allowing
more flexible funding models. It focuses on how these changes impact common structures like
the partnership flip and give rise to new tools, such as tax credit transfer. The paper also looks
ahead, considering how shifts in political leadership influence the future of these incentives
and what that means for investors, developers, and the broader clean energy market.
References
Akin Gump Strauss Hauer & Feld LLP. “Project Finance: Structuring for Success.”
Mondaq, March 20, 2018. https://www.mondaq.com/unitedstates/project-financeppp-amp-
pfi/684640/project-finance-structuring-for-success.
Amodei, Mark. “AP Race Call: Republican Mark Amodei Wins Reelection to U.S. House in
Nevada’s 2nd Congressional District.” Associated Press, November 6, 2024.
https://apnews.com/article/race-call-amodei-wins-nevada-u-s-house-district-
0f33d7aa71f040c1ad403595c7d6d0f8.
Ashley, Robert da Silva. “United States Project Finance.” Legal 500 Country Comparative
Guides.
Baker, Hayden S., et al. “Clean Energy Tax Credits – Transferability and Deal Structure
Alternatives.” White & Case, May 20, 2024. https://www.whitecase.com/insight-our-
thinking/clean-energy-tax-credits-transferability-and-deal-structure-alternatives.
Blood, Michael R. “Republican David Valadao, Democrat George Whitesides Win US House
Races in California.” Associated Press, November 12, 2024.
https://apnews.com/article/california-house-majority-republicans-democrats-swing-districts-
e146c98a3809edaafd892caa3bcaf7bd.
Bowers, Kate R., and Daniel J. Sheffner. “Agency Rescissions of Legislative Rules.”
Congressional Research Service, R46673, February 8, 2021.
Brooks, Emily. “Republican Rep. Jen Kiggans Wins Reelection in Virginia Beach District.”
The Hill, November 6, 2024. https://thehill.com/homenews/4974441-jen-kiggans-virginia-
house/.
Budryk, Zack. “18 House Republicans Ask Johnson Not to Target IRA Clean Energy Tax
Credits.” The Hill, August 7, 2024. https://thehill.com/policy/energy-environment/4815990-
mike-johnson-ira-clean-energy-tax-credits/.
Burton, David. “How the Presidential Election Could Impact Renewable Energy Tax Credits.”
Tax Equity News, October 11, 2024.
Carney, Jordain. “Republican Don Bacon Holds on to Win Reelection in Nebraska House
Seat.” Politico, November 8, 2024. https://www.politico.com/news/2024/11/08/republican-
don-bacon-nebraska-00188144.
Chern, Connie, CPA. “What Tax Credit Buyers and Sellers Can Expect in a Section 48 ITC
Due Diligence Package.” Reunion Infrastructure, January 22, 2025.
https://www.reunioninfra.com/insights/section-48-itc-due-diligence-guide.
Ciscomani, Juan. “Republican Rep. Juan Ciscomani Wins Reelection to Arizona US House
Seat.” Associated Press, November 13, 2024. https://apnews.com/article/arizona-house-
election-ciscomani-engel-286b0a0d7e45c555d4469b8ba264824a.
Cockerham, Scott W. “Putting U.S. Solar Financing Structures in Perspective.” Tax Notes,
July 23, 2018, 499–503.
Curtis, John. “Republican US Rep. John Curtis Wins Mitt Romney’s Open Senate Seat in
Utah.” Associated Press, November 6, 2024. https://apnews.com/article/utah-senate-election-
romney-john-curtis-2eeeda22d91e46ef028bf7b1adbe5cab.
D’Alelio, Drew, et al. “The Essence of Tax Equity.” Yale Center for Business and the
Environment, Clean Energy Finance Forum, May 16, 2022.
Denning, Liam, et al. “Biden Is Giving Red Districts an Inconvenient Gift: Green Jobs.”
Bloomberg, June 20, 2024. https://www.bloomberg.com/graphics/2024-opinion-biden-ira-
sends-green-energy-investment-republican-districts/.
Department of the Treasury and IRS. Section 45Y Clean Electricity Production Credit and
Section 48E Clean Electricity Investment Credit, 26 CFR Part 1 (TD 10024), RIN 1545-BR17.
Dvoretzky, Shay, et al. “Supreme Court’s Overruling of Chevron Deference to Administrative
Agencies’ Interpretations of Statutes Will Invite More Challenges to Agency Decisions.”
Skadden Publications, July 9, 2024.
Eisen, Joel B., et al. Energy, Economics, and the Environment: Cases and Materials. 6th ed.
Foundation Press, 2024.
Energy Policy Act of 2005. § 388, P.L. 109–58.
Ferguson, James A. “Death, Taxes, and Clean Energy: How the Inflation Reduction Act
Harnesses Tax Law to Revitalize American Clean Energy.” Journal of Business,
Entrepreneurship & Law 17 (2024).
Feigin Harris, Susan, et al. “‘Chevron Is Overruled’: Supreme Court Decision Upends the
Era of Agency Rule.” Norton Rose Fulbright, July 2024.
https://www.nortonrosefulbright.com/en/knowledge/publications/5ef22f81/chevron-is-
overruled-supreme-court-decision-upends-the-era-of-agency-rule.
Fusaro, Peter C., and Andrea S. Kramer. Energy and Environmental Project Finance Law
and Taxation: New Investment Techniques.
Greene, Brian, et al. “Project Finance.” In The Project Finance Law Review, 3rd ed., Ch. 17.
Law Business Research Ltd., June 2021.
Hunter, Lesley, and Mason Vliet. “The Risk Profile of Renewable Energy Tax Equity
Investments.” American Council on Renewable Energy, December 2023.
Internal Revenue Service. Rev. Proc. 2007-65, 26 CFR 601.105.
———. Wind Energy Partnership, Announcement 2009-69.
———. Applicability of Rev. Proc. 2007-65 to Section 48 Energy Credit Partnership, IRS
Office of Chief Counsel Memorandum 201524024, December 6, 2015.
———. Market Segment Specialization Program Guideline, Rehabilitation Tax Credit, July
2012.
———. IRS Fact Sheet, FS-2006-27, November 2006.
Inflation Reduction Act of 2022. Public Law No. 117–169, 136 Stat. 1818 (2022).
Katz, Eli, and Kelly Cataldo. “Tax Credit Transfer Bridge Loans: Structuring Issues and
Considerations.” Project Finance International, September 20, 2023.
Kean Jr., Tom. “Republican Tom Kean Jr. Is Reelected in N.J.’s 7th Congressional District,
Defeating Democrat Sue Altman in Tight Race.” WHYY, November 6, 2024.
https://whyy.org/articles/new-jersey-election-tom-kean-jr-7th-congressional-district-race-
results/.
Keightley, Mark O., et al. “Tax Equity Financing: An Introduction and Policy
Considerations.” Congressional Research Service, R45693.
Kim, Young. “AP Race Call: Republican Young Kim Wins Reelection to U.S. House in
California’s 40th Congressional District.” Associated Press, November 7, 2024.
https://apnews.com/article/race-call-kim-wins-california-u-s-house-district-
3cc343b3b63e4dd08c19f487d651aaf3.
Kramer, Andrea S., and Peter C. Fusaro. Energy and Environmental Project Finance Law
and Taxation: New Investment Techniques.
Layser, Michelle D. “Improving Tax Incentives for Wind Energy Production: The Case for a
Refundable Production Tax Credit.” Missouri Law Review 81 (2016): 453–517.
Latham & Watkins LLP. The Book of Jargon® – Project Finance: A Latham & Watkins
Glossary of Project Finance Slang and Terminology. 3rd ed., 117.
Lawler, Mike. “Republican Mike Lawler Retains Pivotal Suburban NYC House Seat.”
Politico, November 6, 2024. https://www.politico.com/live-updates/2024/11/05/2024-election-results-live-coverage-updates-analysis/mike-lawler-wins-new-york-city-house-race-
00187024.
LaLota, Nick. “Republican Rep. Nick LaLota Wins Second Term.” Politico, November 6,
2024. https://www.politico.com/live-updates/2024/11/05/2024-election-results-live-coverage-
updates-analysis/nick-lalota-wins-new-york-house-race-00187262.
Loper Bright Enterprises v. Raimondo. Nos. 22-451 and 22-1219, 45 F. 4th 359 and 62 F.
4th 621.
Machlin, Barry N., and Brigette A. Rummel. “The Plus and Minus of Project Finance.”
Mayer Brown, November 2020.
Mann, Roberta F. “Driving Transformation: Tax Strategies for Electrifying Light-Duty
Transportation.” Legal Studies Research Paper Series 53 LER 10298.
Martin, Keith. “Calculating How Much Tax Equity Can Be Raised.” Project Finance
NewsWire, February 28, 2022.
https://www.projectfinance.law/publications/2022/february/calculating-how-much-tax-
equity-can-be-raised/.
———. “Cost of Capital: 2024 Outlook.” Project Finance NewsWire, February 19, 2024.
———. “Partnership Flips: Structures and Issues.” Project Finance NewsWire, February 18,
2021. https://www.projectfinance.law/publications/2021/february/partnership-flips/.
———. “Right-Side, Left-Side Issues in Tax Equity Deals.” Project Finance NewsWire,
August 17, 2022. https://www.projectfinance.law/publications/2022/august/right-side-left-
side-issues-in-tax-equity-deals/.
Matthau, David. “Republican Tom Kean Jr. is Reelected in N.J.’s 7th Congressional District.”
WHYY, November 6, 2024. https://whyy.org/articles/new-jersey-election-tom-kean-jr-7th-
congressional-district-race-results/.
Moon, Andy, and Billy Lee. “Buying and Selling Clean Energy Tax Credits: Key Issues and
Risk Mitigation Strategies.” Practical Law Finance, W-041-8237.
Nilsen, Ella, and Renee Rigdon. “The Biggest Winners of Biden’s Green Climate Policies?
Republicans.” CNN, June 16, 2024. https://www.cnn.com/2024/06/16/climate/clean-energy-
investment-republicans/index.html.
Opsahl, Robin. “Rep. Mariannette Miller-Meeks Wins Reelection After Recount, AP
Projects.” Associated Press, November 27, 2024.
Peters, Keaton. “Flush With the Promise of Tax Credits, Clean Energy Projects Are Booming
in Texas.” Inside Climate News, August 16, 2023.
https://insideclimatenews.org/news/16082023/texas-solar-inflation-reduction-act/.
Practical Law. “Inflation Reduction Act: Key Energy Provisions.” Practical Law Finance,
August 16, 2022, W-036-5087.
———. “Inflation Reduction Act Introduces New Corporate Taxes and Includes New Clean
Energy Tax Incentives.” Practical Law Corporate & Securities, August 15, 2022, W-036-5512.
Press Release. “IRS Releases Guidance on Provisions to Expand Reach of Clean Energy Tax
Credit Through President Biden’s Investing in America Agenda.” U.S. Department of the
Treasury, March 5, 2024. https://home.treasury.gov/news/press-releases/jy2157.
Reisman, Nick. “Republican Rep. Nick LaLota Wins Second Term.” Politico, November 6,
2024. https://www.politico.com/live-updates/2024/11/05/2024-election-results-live-coverage-
updates-analysis/nick-lalota-wins-new-york-house-race-00187262.
———. “Republican Mike Lawler Retains Pivotal Suburban NYC House Seat.” Politico,
November 6, 2024. https://www.politico.com/live-updates/2024/11/05/2024-election-results-
live-coverage-updates-analysis/mike-lawler-wins-new-york-city-house-race-00187024.
Slowey, Erin. “Treasury Floats Allowing Individuals to Buy Energy Tax Credits.” Bloomberg
Tax, October 16, 2023. https://news.bloombergtax.com/daily-tax-report/treasury-floats-
allowing-individuals-to-buy-energy-tax-credits.
U.S. Code. 26 U.S.C. § 48.
U.S. Code. 26 U.S.C. § 50(a)(1)(B).
Valadao, David. “Republican David Valadao Wins Reelection.” Associated Press, November
12, 2024.
Vann, Adam. “Offshore Wind Energy Development: Legal Framework.” Congressional
Research Service, R40175, February 28, 2023.
Waldman, Scott. “Kushner’s Solar Wager vs. Trump 2.0.” Politico, June 5, 2024.
https://www.politico.com/news/2024/06/05/jared-kushner-solar-investments-trump-
00161598.
Zaza, Jenna, and J.D. Allen. “Garbarino Secures Third Term in NY’s 2nd District.” WSHU,
November 6, 2024. https://www.wshu.org/long-island-news/2024-11-06/ny-2nd-district-
andrew-garbarino-2024-election.
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Jurnal Paradigma Hukum Pembangunan
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Diperbolehkan atau tidak mempublikasikan tulisan di resopitory instansi penulis
