Reunion

Why I Will Keep Charging Forward on Clean Energy the Day After the Election I have worked in the solar industry (”the solar-coaster”) since 2008, and it hasn’t always been a smooth ride. But the industry is resilient: just look at how far we have come in clean energy adoption in the last 20 years. Every time we have had a setback, it has been temporary - and the industry has emerged stronger. The Inflation Reduction Act has had a significant impact on clean energy deployment, leading to significant growth in solar, wind, and other clean energy technologies (https://lnkd.in/grd2p4zw): 🔺 The two-year post-IRA period has seen $89 billion in investment in new, US-based clean energy manufacturing, versus $22B in the two years preceding the IRA 🔺 Investment in clean energy production and industrial decarbonization is $161 billion since the passage of the IRA, a 43% increase from a comparable pre-IRA period Americans overwhelmingly support clean energy. Clean energy is now a major part of the US economy, employing over 3.5 million workers. Since 2020, the clean energy industry has added 400,000 new jobs, significantly faster than the rest of the energy sector. (https://lnkd.in/g4xrncKe) The federal solar investment tax credit was first passed under the George Bush administration via the Energy Policy Act of 2005, and for the last 20 years there has been a looming threat that this tax credit will be removed. But it has persisted, because it has been very effective in driving solar adoption, and solar energy is extraordinarily popular among Americans. Similarly, the Inflation Reduction Act has bipartisan support. In August, a group of 18 Republican Congress members wrote to a letter to Speaker Mike Johnson saying: “Prematurely repealing energy tax credits, particularly those which were used to justify investments that already broke ground, would undermine private investments and stop development that is already ongoing.” Speaker Johnson responded that when making changes to the IRA, “you’ve got to use a scalpel and not a sledgehammer.” We have reason for optimism that the major provisions in the Inflation Reduction Act will persist. It’s unlikely that a majority of Congress will support a significant repeal of a law that is driving new jobs and significant investments in clean energy. Repealing the IRA after it has been in force for 2+ years will also upend many private businesses, which have made billions in investments under the anticipation that the law will be in force for a decade if not substantially longer. The team at Reunion and I remain optimistic about a clean energy future - in fact, we are fully committed to hiring more people to join our mission!(https://lnkd.in/gnv9KGTw)

Why I Will Keep Charging Forward on Clean Energy the Day After the Election I have worked in the solar industry (”the solar-coaster”) since 2008, and it hasn’t always been a smooth ride. But the industry is resilient: just look at how far we have come in clean energy adoption in the last 20 years. Every time we have had a setback, it has been temporary - and the industry has emerged stronger. The Inflation Reduction Act has had a significant impact on clean energy deployment, leading to significant growth in solar, wind, and other clean energy technologies (https://lnkd.in/grd2p4zw): 🔺 The two-year post-IRA period has seen $89 billion in investment in new, US-based clean energy manufacturing, versus $22B in the two years preceding the IRA 🔺 Investment in clean energy production and industrial decarbonization is $161 billion since the passage of the IRA, a 43% increase from a comparable pre-IRA period Americans overwhelmingly support clean energy. Clean energy is now a major part of the US economy, employing over 3.5 million workers. Since 2020, the clean energy industry has added 400,000 new jobs, significantly faster than the rest of the energy sector. (https://lnkd.in/g4xrncKe) The federal solar investment tax credit was first passed under the George Bush administration via the Energy Policy Act of 2005, and for the last 20 years there has been a looming threat that this tax credit will be removed. But it has persisted, because it has been very effective in driving solar adoption, and solar energy is extraordinarily popular among Americans. Similarly, the Inflation Reduction Act has bipartisan support. In August, a group of 18 Republican Congress members wrote to a letter to Speaker Mike Johnson saying: “Prematurely repealing energy tax credits, particularly those which were used to justify investments that already broke ground, would undermine private investments and stop development that is already ongoing.” Speaker Johnson responded that when making changes to the IRA, “you’ve got to use a scalpel and not a sledgehammer.” We have reason for optimism that the major provisions in the Inflation Reduction Act will persist. It’s unlikely that a majority of Congress will support a significant repeal of a law that is driving new jobs and significant investments in clean energy. Repealing the IRA after it has been in force for 2+ years will also upend many private businesses, which have made billions in investments under the anticipation that the law will be in force for a decade if not substantially longer. The team at Reunion and I remain optimistic about a clean energy future - in fact, we are fully committed to hiring more people to join our mission!(https://lnkd.in/gnv9KGTw)

Reunion is hitting the road this fall! Catch our team at the following events: 📍 October 21-23: Stop by our booth at the Association for Financial Professionals Annual Conference in Nashville, TN 📍October 24-25: Andy Moon and Denis Cook will be speaking about Reunion’s Q3 Market Intelligence Report at the Chicago Tax Club’s 70th Annual Fall Seminar in Lisle, IL 📍October 27: Reunion is hosting a South Texas Dinner and River Cruise to kick off the Tax Executives Institute 79th Annual Conference in San Antonio, TX 📍October 29: Andy Moon will be speaking on a panel on “Navigating Transferable Credit Inquiries from the C-Suite” at the TEI Annual Conference in San Antonio, TX 📍November 7-8: William Lee will be speaking on tax credit transfers at the Novogradac Fall Renewable Energy Credits Conference in Washington, DC Please e-mail us at info@reunioninfra.com to set up a meeting.

Corporate taxpayers should begin looking at 2025 clean energy tax credits now to avoid a highly competitive year-end market. Reunion saw this seasonal dynamic play out in 2023, and we are experiencing it again in 2024. We believe this emerging pattern of seasonality in the clean energy tax credit market reflects a general supply-demand imbalance toward year-end. As corporations get a clearer sense of their tax liability in Q3 and Q4, they enter a market that is relatively short on supply, resulting in higher pricing for remaining credits. While pricing has increased across all credit types, the most marked increase has been with large, straightforward ITC projects that are coveted by large buyers. Opportunities that traded in the $0.92 to $0.93 range for most of the year, for example, are now receiving bids of $0.94 or even $0.95. To avoid “chasing credits,” buyers should begin exploring 2025 tax credit opportunities now. They have several strategies at their disposal: 📌 Execute tax credit transfer agreements early: Buyers who are able to commit to 2025 credits now will enjoy less competition and potentially better pricing. 📌 Be willing to go slightly out of pocket: Buyers who are willing to go slightly “out of pocket” — for example, willing to pay for an ITC in Q1, Q2, or even Q3 — will enjoy a larger discount to compensate for timing of payment. 📌 Consider smaller projects: Focusing on a single, large transaction places most buyers in a highly competitive segment of the market. Moving from a single transaction of $80M to two transactions of ~$40M can meaningfully improve deal economics. Corporations who are comfortable with their 2025 tax liability should begin shifting their attention to 2025. Q4 2024 is a good time to lock in some of the most attractive 2025 deals, particularly for larger ITC, PTC, and AMPC opportunities. https://lnkd.in/gv2Aecdx

As a long-time listeners of Norton Rose Fulbright's Currents podcast, we are very excited that our co-founders Andy Moon and William Lee were able to share insights on the market for clean energy tax credits. Since this episode was recorded in August, there has been one notable shift in the market. An unexpectedly high volume of taxpayers with $200M to $1B+ in tax appetite have entered the market for 2024 credits, and they are all looking for large, straightforward opportunities above $75 to $100M in volume. At this point in the year, there are not many large 2024 credit opportunities left. This has resulted in significant upward pressure on pricing, with buyers willing to bid $0.94, $0.95 or even slightly higher for these ITCs. This is a marked increase from the $0.92 to $0.93 range we were seeing earlier in the year for large, straightforward ITCs. Stay tuned for a more detailed analysis of this market dynamic!

Reunion celebrated an exciting milestone this month: we have facilitated over $1.6 billion in clean energy tax credit transfers through the first three quarters of 2024. We are on track to facilitate over $3 billion in transfers by year end — a significant share of the estimated $21B to $24B market for transferable tax credit transfers. Every corner of the market has accelerated. We’ve supported buyers who invested in tax equity long before transitioning to transferability, just as we’ve supported buyers who made their first clean energy investment with a transferable tax credit purchase this year. We attribute a large portion of our success to our direct relationships with buyers and sellers. By minimizing fees and ensuring all parties are “transaction ready,” we can meaningfully increase certainty of close. If you’re buying or selling clean energy tax credits, we hope you’ll get in touch. #transferability #cleanenergy #taxcredits #inflationreductionact https://lnkd.in/gMWn7gds

Over the past 12 months, Reunion has directly engaged over 250 corporate taxpayers who have purchased, or are planning to soon purchase, clean energy tax credits. When viewed by sector, Reunion’s pool of tax credit buyers parallels the broader U.S. corporate landscape (as represented by the S&P 500). This is an exciting testament to the effectiveness of the Inflation Reduction Act’s transferability mechanism, which was intended to broaden the pool of companies who could invest in clean energy. There are exceptions, of course. Energy and consumer discretionary companies have played an outsized role, while utility and healthcare companies have played a more modest role. What’s clear, though, is that companies of all stripes are thoughtfully entering the market. #transferability #cleanenergy #inflationreductionact

Certainty and speed of close have become increasingly important factors for clean energy developers and manufacturers looking to sell tax credits. Reunion has repeatedly observed tax credit sellers favor offers that come from a buyer whom the seller feels is likely to get to the finish on a reliable timeline, even if another party is offering a higher price. We see this trend in our transactions data. Since Q4 2023, the average duration of a tax credit transfer - from signing a term sheet to signing a tax credit transfer agreement - has fallen from over 100 days to right around 45 days. We typically see exclusivity periods of 30 to 60 days; sellers who feel they have the most leverage (these are often sellers with the largest, most straight-forward projects) demand the shortest exclusivity periods. To be well positioned in this market, first-time buyers should: ✅ Have internal approval(s) lined up, including approval to hire external counsel and other required advisors ✅ Know who has signing authority and to what extent. A VP or Director of Tax often has signing authority, although certain transactions require approval from the CFO, CEO, or Board. If a transaction requires committee and/or board approval, it’s ideal to get pre-approval on deal parameters or have the ability to get approval without needing to wait for a formally scheduled board meeting ✅ Differentiate between must-haves and nice-to-haves with respect to acquisition requirements - and assume both will shift through time We are hearing of an increasing number of situations where sellers are presented with a buyer, but the deal falls apart after a term sheet is signed. We believe that a lot of effort is required to get buyers “transaction-ready” - particularly if this is a buyer’s first clean energy transaction. Reunion invests significant time working with a buyer’s tax, treasury, legal, finance and other teams to get them transaction-ready, resulting in higher certainty and speed of close for sellers.

Reunion recently announced that we have facilitated over $1.5 billion in tax credit transfers so far in 2024! We work closely with dozens of Fortune 500 clients and leading clean energy companies to buy and sell clean energy tax credits. Please get in touch if you'd like to learn more about how to get started with Reunion. #ira #taxcredits #reunion #climate

Earlier this year, Reunion partnered with Summit Ridge Energy, the leading commercial solar company in the United States, to facilitate the sale of approximately $40 million of transferable tax credits from a portfolio of community solar projects in Virginia. ☀ The sale of these credits will immediately enable Summit Ridge to expand its footprint of clean energy assets in disadvantaged communities across the United States. 🎉 Congratulations to the entire SRE team, including Phil Schapiro, Jake Compton, and Adam Kuehne. (Fun fact: Jake and Adam are both former Naval submarine officers - impressive). I enjoyed working with them on this transaction and look forward to future deals together. 🚀 Our collaboration with Summit Ridge Energy was one of a rapidly growing number of tax credit deals that Reunion facilitated in 2024, and is indicative of the increasing adoption and demand for IRA tax credits by corporate tax teams. If you are a clean energy developer or manufacturer that would like to sell tax credits, please get in touch! Reunion works directly with dozens of Fortune 500 companies actively looking to purchase 2024 and 2025 tax credits. https://lnkd.in/gZupVUe3 #IRA #taxcredits #climate #communitysolar #reunion #SRE