Maximizing speed of origination and due diligence for a $200M transfer of §45 PTCs
Overview
In 2024, Reunion facilitated a $200M transfer of §45 production tax credits (PTCs) between two large publicly traded companies. The deal, involving credits from over 100 wind and utility-scale solar facilities spanning 10+ sites, marked a first-time transaction in federal clean energy tax credits for this Fortune 500 buyer.
Reunion addressed both the buyer’s desire to minimize out-of-pocket expenses and the seller's objective to maximize cashflow by structuring terms that included quarterly arrears payments and a capped true-up mechanism to account for production variability. Furthermore, audit readiness was a key requirement for the buyer. This was solved by developing a dynamic, audit-friendly, and reusable data room that houses robust due diligence documentation. This successful transaction laid the foundation for future deals between the parties including a "repeat" 2025 transaction.
The Deal Highlights
§45
PTC
Credit type
$200M - $220M
Volume
Quarterly true-ups
100+
Facilities
Wind & Utility Solar
Energy Community
Bonus Adder
On a subset of assets
Aligning Buyer and Seller Motivations
Matching transaction needs, deal-worthiness criteria, and cash flow considerations across buyer and seller was essential to hatching the deal.
The Buyer
Fortune 500
Corporation
with operations throughout the U.S.
Ownership: Publicly Traded
Deal lead: Director of Tax
Transactional experience: First time purchasing §6418 clean energy tax credits.
Motivations
Minimize out-of-pocket expenses by paying for credits quarterly on estimated tax payment dates
Purchase from a single, experienced counterparty, ideally publicly traded, who can provide $200M+ of credits
Minimize transactional risk by purchasing PTCs that are exempt from PWA requirements
The Seller
Diversified Energy
Company
with over 2GW in operation across the U.S.
Ownership: Publicly Traded
Deal lead: VP of Tax
Transactional experience: Prior experience with tax equity and transferability.
Motivations
Maximize cashflow by monetizing quarterly and garnering a compelling price
Sell to a single counterparty who is capable of purchasing $200M-220M of PTCs
Partner with a Fortune 500 buyer with consistent annual tax liability and potential for repeat transaction
Negotiating terms for mutual success
Managing cash flow timing and production uncertainty ensured a predictable, flexible and successful transfer.
Minimizing out-of-pocket expenses
Reunion structured credit payments quarterly in arrears, on or after the buyer’s estimated tax payment date, avoiding the need to go out-of-pocket when compared to regular tax payments.
$200 M
Credit Cap
Up to $220M
Mutual option to increase cap
True Ups
Scheduled quarterly + year end, subject to cap
Addressing PTC Uncertainity
Flexible terms were created to account for variability in production figures (commonly adjusted for up to six months after generation) and mid-year publication of PTC rates, both of which can impact the PTC volume generated.
Thoroughly but efficiently mitigating risk
Employing unique approaches to facilitate a thorough but efficient due diligence process.
Tax credit qualification
Validated tax credit qualification for 100+ energy facilities across 4 Regional Transmission Organizations (RTOs) by mapping them onto recent satellite images to confirm their existence, location, and function.
PTC Rates & PWA Requirements
Consolidated disparate files onto a single dashboard to confirm relevant Placement In Service (PIS) and Beginning Of Construction (BOC) dates. and as such determine PTC credit rates and exemptions from Prevailing Wage and Apprenticeship (PWA) requirements.
Energy generation & sale
Substantiated the generation and sale of electricity to third parties by aggregating settlement files from four RTOs that corresponded to the relevant facilities and creating a software tool to validate the amount of electricity sold.
Achieving an audit-ready posture
Helping the buyer, who is currently in the Compliance Assurance Process (CAP), become “audit-ready” with detailed documentation for possible IRS Information Document Requests (IDRs).
1
Aggregated industry knowledge regarding previous IDRs
...for wind and solar projects. Reunion relied extensively on tax equity audits as precedent, given the nacency of tax credit transfers under §6418.
2
Built a robust data room with all books, records, and documentary evidence
...that would need to be readily available, including documents that otherwise may not have been included in diligence.
3
Documented the diligence process and data room contents in a memo
...that summarizes key information about the tax credit seller and the complete tax credit portfolio.
Built a robust data room with all books, records, and documentary evidence
...that would need to be readily available, including documents that otherwise may not have been included in diligence.
1
2
3
Aggregated industry knowledge regarding previous IDRs
...for wind and solar projects. Reunion relied extensively on tax equity audits as precedent, given the nacency of tax credit transfers under §6418.
Documented the diligence process and data room contents in a memo
...that summarizes key information about the tax credit seller and the complete tax credit portfolio.
Spotlight: Maintaining a live data room
Given the “audit-ready” nature of this transaction, Reunion maintains a dynamic data room for the buyer and seller.
Risk categories
Date room contents (not exhaustive)
Seller diligence
Seller diligence
Organizational chart and other ownership documents
Financial statements
Qualification
Qualification
Satellite imagery + exhaustive collection of site control documents
Interconnection documents
Numerous XML files from multiple grid operators reflecting energy settled/sold
PTC amount
PTC amount
Documentary evidence for PIS dates: Turbine completion certificates, EPC substantial completion certificates, correspondence regarding permission to operate between interconnection parties
Documentary evidence for BOC dates: BOC certificates, memorandums documenting safe harbor strategies employed (Physical Work Test and Five Percent Test), relevant supporting evidence, including supply and product agreements, bank statements, invoices, purchase orders and bills of lading, construction progress imagery from third party site visits, etc.
Repower documentation (“80/20” test)
PWA and bonus credits
PWA and bonus credits
Documentation of prevailing wage exemptions due to placement-in-service dates or beginning of construction dates, as diligenced above under “Amount of PTC”
Turbine by turbine location verification (latitude and longitude coordinates) to confirm energy community eligibility
Final Reflections
This §45 PTC transfer is a perfect example of how a thoughtful, well-structured transaction can add lasting value to the buyer and the seller.
Diligence presented challenges because of the “audit-ready” standard, and the size of the portfolio with over 100 facilities across 10+ sites.
However, due to the nature of PTC transactions, the majority of diligence is reusable for additional PTC transfers from this portfolio in subsequent calendar years.
Both parties will be able to use the original due diligence package for repeat deals by leveraging materially similar deal terms and the same portfolio of projects. Supplemental diligence will be focused around any changes to the portfolio, and validation of production and sale of electricity in 2025.
As of the publication of this case study, the buyer and seller have in fact executed a “repeat” 2025 transaction.
