The ripple effects from your investment in clean energy transferable tax credits (TTCs) extend far beyond managing your tax liability.
Corporate Buyers
With your purchase of TTCs, not only do you provide financing support to solar, wind, battery storage, and other clean energy projects, you will generate an attractive risk-adjusted return on cash, boost your company’s earnings, and reduce your effective tax rate.
Buyers yield a return on cash as they reduce their income tax liability by the face value of the credits they purchase at a discount. Additional timing factors add further to the benefit. For example, a buyer could reduce Q1 estimated tax payments based on TTCs they pay cash for in Q4.
Buyers boost their financial statement earnings as they recognize an income tax benefit and a reduction to their effective tax rate when they utilize the credits. The net income increase recognized adds another layer of benefit to your decision to support the green energy transition.
Clean Energy Projects
From start-ups to long-existing generators, green energy projects across the nation are experiencing unprecedented growth due in part to policies bolstered by the IRA. Built-in incentives, like TTCs, attract corporate buyers from all industries who are looking to offset tax liability and help advance clean energy projects through their purchases of credits.
In 2024, the approximate $145 billion of private sector investments and $30 billion of tax credit transfer transactions were significant drivers of the thriving U.S. clean energy economy. American ingenuity and competitiveness are evident as clean energy investments generate benefits across the environment, businesses, and local economies.
Since 2023, more than 80 GW of new energy capacity in solar, wind, biomass, and battery have been added to the U.S. grid. In fact, 25% of U.S. electricity generating capacity is now represented by renewables. Local economies also welcome clean energy projects as 400,000 new jobs have been created across the nation.
The Planet
The U.S. has a long history of responsible environmental stewardship that has made our skies and waterways among the cleanest in the world. Continuing in those footsteps of successful policies, the IRA is now broadening the scope of participants involved in helping the natural world remain a better, cleaner place to live.
The purchase of TTCs is a proactive strategy, not only to achieve short-term financial goals, but to make meaningful, lasting impacts, locally and globally, on decarbonization efforts and continued pollution and waste mitigation. As global demand for electricity increases, corporate investment will continue to be the driving force behind the innovation and financing necessary in the clean energy sector, delivering a greener future.
People Everywhere
As the health of environments improve, so too does the health and well-being of individuals and families that inhabit them. With every dollar invested in clean energy financing and generation, we move closer to safer, more affordable energy solutions and the opportunity for people everywhere to enjoy fresher air, purer drinking water, and the beauty of our natural world.
By trusting Smith Dierking to help your company achieve financial goals today, you’re also playing a part in taking care of the planet and its people tomorrow. We can work together to create a strategy where everyone benefits.