Hello readers,
I’m heartened to share exciting news from the solar industry. Our home-grown solar companies are set to experience a boost, thanks to a significant change in financial policy. In 2022, the Inflation Reduction Act opened up an advantageous pathway for clean energy developers. This policy change permits these innovators to sell their federal tax credits to third parties—an arrangement that exchanges valuable cash for tax concessions, accelerating investment in the field.
The latest Market Intelligence Report from Crux presents some encouraging figures. In the first half of 2024 alone, transactions worth $6.8 billion have been tracked, which correlates to estimates of $9 to $11 billion in deals closed nationwide. By the close of the year, it’s anticipated that U.S. clean energy tax credit transactions will total a substantial $20 to $25 billion!
Established technologies – think wind, utility-scale solar, energy storage, and advanced manufacturing credits – command a significant share of these transactions. And it’s thrilling to note that residential solar projects and distributed generation will likely become strong players in the second half of 2024!
Focusing on our beloved solar sector, it’s growing to be quite the powerhouse. Solar alone commands a remarkable 41% of total supply in tax credits, with solar and storage hybrid projects representing a further 9%! This shows the growing importance of solar panels for your home and larger solar array for home installations.
Crux’s report also highlights buoyant pricing for the first half of 2024. Production Tax Credit (PTC) deals averaged at $0.95 per dollar of tax credit value, and $0.925 for Investment Tax Credit (ITC) deals—a small but optimistic increase from last year’s figures.
It’s intriguing to examine deal size in this evolving industry landscape. The average figures reported were $55 million for ITC deals and $85 million for spot PTC deals. But don’t be mistaken—there’s an emerging appetite for smaller tax credit deals as well, pointing to a healthy financial environment for businesses of all sizes.
Deal size and insurance factor strongly into market pricing. Deals valued between $5 million and $25 million saw slightly lower average pricing, and the use of insurance in ITC deals correlated with lower pricing. But with various solar companies entering the field and increasing diversification in technology, we’re looking at a robustly growing market.
To conclude, the future is looking decidedly sunny for solar companies and home solar panels. With financial policy support and booming market trends, our solar industry is positioned for growth—driving innovation, creating jobs, and leading the clean energy revolution. Stay tuned for more updates on your journey to harnessing the sun’s power at home!
Original Articlehttps://pv-magazine-usa.com/2024/07/29/u-s-clean-energy-tax-credit-market-to-reach-25-billion-in-2024/
