US bank First Citizens Bank has entered the renewable energy tax equity investment space, focusing on solar, wind and battery energy storage system (BESS) projects.
Yesterday, the bank launched a new tax equity investment “product” through its Energy Finance business. The bank said it is designed to “address a market shortage of expertise needed to structure and deliver tax equity investments.”
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Tax equity financing forms a major part of the US solar and energy storage industries’ development, particularly following the Inflation Reduction Act (IRA). The IRA introduced US$369 billion in tax incentives for developing and investing in renewable energy projects and has sparked an explosion in US clean energy financing.
The central pillars of the IRA’s tax breaks are the Investment Tax Credit (ITC) and Production Tax Credit (PTC), which reduce tax payments on capital used to build new renewable energy projects. The ITC applies to the costs of establishing new projects, whilst the PTC relates to energy produced at a site.
“This new tax equity investment product allows us to further leverage our expertise in renewable energy finance,” said Mike Lorusso, head of Energy Finance. “By expanding our product base to include tax equity investments, we are now even better able to serve our relationship clients with innovative options.”
The clean energy tax credit and equity market is booming in the US. Earlier this week, in comments seen by PV Tech, Foss & Company said that the entire Fortune 500 list is looking into clean energy transferability deals. Tax transferability was introduced under the IRA to allow companies to sell clean energy tax credits to free up cash for further investment.
In July this year, investors and market observers said that the transferability market “blows the doors open” for the US solar financing space (premium access). Indeed, data from sustainable finance company Crux showed that the tax credit transferability market reached US$11 billion in the first half of 2024 and could hit US$25 billion by the end of the year.
From a solar PV perspective, one of the most consequential tax breaks is the 45X Advanced Manufacturing Credit, which the Department of the Treasury finalised last week. Industry observers have said that the 45X credits could be the most consequential legislation for establishing a robust US solar manufacturing industry.
