Dive Brief:
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Seattle-based startup Ever.green and Baker Tilly, a top ten accounting firm, have begun building an online marketplace that will serve as a platform for buying and selling clean energy tax credits.
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The marketplace helps renewable energy developers identify which Inflation Reduction Act tax credits may apply to their projects, and then allows them to list those tax credits for sale on the platform to raise up-front capital for their projects. Buyers, in the future, will have access to tax credit listings on a website that David Dollihite, energy transition practice managing director at Baker Tilly, compared to MLS listings for real estate agents.
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Some marketplace features are still unavailable pending tax guidance from the IRS, but Ever.green anticipates the platform will be fully operational for solar developers in the next four to eight months. Options for wind, storage and electric vehicle tax credits will follow.
Dive Insight:
Investor interest in renewable energy has boomed in recent years, but restrictions such as the limited number of solar developers that are publicly traded have restrained the growth of this market segment. With the IRA now in play, Ever.green and Baker Tilly hope to simplify renewable energy finance while vastly expanding the investment playing field.
The collaborators are developing an online platform for buying and selling renewable energy tax credits. This isn’t an entirely new concept – tax credits have long played a role in securing the financing for renewable energy development.
But before the IRA, would-be investors had to own equity in a project in order to access the tax credits themselves. In the future, tax credits will be available to a greater number of buyers thanks to a provision in the IRA that makes tax credits transferable to other businesses and to individuals with certain kinds of passive income – such as earnings from real estate investments.
To Ever.green, a two-year-old startup with marketplaces for power purchase agreements and renewable energy credits already in the works, venturing into the tax credit business seemed like a ripe opportunity.
“Coming from the other side of the table, Baker Tilly has been in the tax credit business for 12-15 years,” Dollihite said. “We saw there was a greatly underserved market ... a lot of people out there want to put capital to work on renewable energy projects, and a marketplace should make it really easy and efficient for people to get involved.”
The tax credit marketplace, which includes tools for estimating the potential value of tax credits under the IRA, is already mostly functional for solar developers, according to Ever.green co-founder and CEO Cris Eugster. For potential buyers of tax credits, Ever.green is still playing a consultant-type role until the outstanding tax credit guidance from the IRS is released, enabling a more standardized marketplace experience.
Eugster estimated that returns on purchases of tax credits could run 8%-10%. Earnings might vary depending on the level of risk associated with the tax credits – for example, if the value of the tax credit depends on a large amount of domestic content that could be subject to supply chain constraints.
“The reason this is so exciting for me is it dramatically expands the flow of capital into clean energy,” Eugster said. “It fundamentally transforms how project financing happens.”
