Prudent buyers can secure deeper discounts on transferable tax credits without assuming outsized risk

Our latest tax credit pricing and markets report revealed that tax credit prices for §48 ITCs, §45 PTCs, and §45X AMPCs have been trading in increasingly narrow bands.

What's more, these credits have been hovering around the maximums that buyers said they would be willing to pay for the highest quality opportunities. According to Reunion's 2024 year-end buyer survey, for instance, our buyers are willing to pay a median price of $0.94 for the highest quality ITC. In Q1 of 2025, however, we placed $50M of ITCs from an investment-grade seller at $0.955.

Despite these competitive pricing dynamics, opportunities for additional discounts exist if buyers are willing to play with axes of time, complexity, or counterparty.

In this note, we explore five key strategies, beginning with the most broadly applicable.

• Look beyond “down the fairway” technologies, like utility-scale solar, wind, and battery storage
• Commit to purchasing tax credits in Q1 or Q2 that will be generated later in the year
• Commit to purchasing ITCs that developers will place in service in the next tax year
• Buy multi-year PTC “strips”
• Look beyond §48 ITCs, §45 PTCs, and §45X AMPCs

‍

Strategy 1: Look beyond “down the fairway” technologies, like utility-scale solar, wind, and battery storage

Strategy

Buyers who are willing to purchase credits from opportunities perceived as more complex can achieve larger discounts. For example, only a subset of buyers are willing to purchase credits from distributed assets (e.g., residential or commercial solar) due to fears of recapture risk and diligence burden from examining a large number of projects. 

This is in contrast to the average buyer request for $100M+ in credit volume from one or two assets generated from an investment-grade seller, which are the most sought-after credits in the market. 

Estimated financial benefit 

Depending on the technology, this strategy can result in an excess financial benefit of $0.01 to $0.03. In Q1 2025, for example, we placed $250M of residential ("resi") solar credits for a Fortune 500 buyer at $0.925. This compared to a utility-scale solar project of comparable size that cleared at $0.9375.

Buyer fact pattern

This strategy is available to virtually all corporate taxpayers. In fact, it is Reunion's defualt recommendation for buyers who have found discounts among "traditional" technologies prohibitively expensive.

‍

Strategy 2: Commit to purchasing tax credits in Q1 or Q2 that will be generated later in the year

Strategy

Buyers who are willing to purchase earlier in the year have more options from which to choose, allowing them to avoid competitive bidding situations and secure better pricing. The impact of seasonality particularly impacts §48 credits, which experience the most dramatic movement in price over the course of the year. 

Estimated financial benefit 

Depending on the underlying credit and technology types, buyers can secure $0.01 to $0.025 of additional benefit. 

Although not an explicitly financial benefit, early-year commitments can also help buyers avoid “bidding fatigue,” which can erode internal momentum and support. Reunion is hearing from more and more buyers who want to avoid competitive, auction-style bidding processes entirely. As one VP of Tax told us, “I don’t want to present this [tax credit opportunity] to my CFO unless I know it’s ours.”

Buyer fact pattern 

To control for placed-in-service (PIS) slippage risk, buyers should have a reasonable view of their tax liability in the next year. At the same time, they should have internal approvals lined up for a tax credit purchase in the next year.

‍

Strategy 3: Commit to purchasing ITCs that developers will place in service in the next tax year

Strategy

Under 5% of buyers are willing to commit to purchasing ITCs from projects that will be placed in service beyond the current year. This presents a financing challenge for sellers: lenders are providing low advance rates on tax credit transfer bridge loans that do not have a creditworthy buyer in place (”naked TRABLs”).

Accordingly, sellers will market these credits well below spot to attract the realtively small pool of buyers who are willing to invest beyond a 12-month horizon.

Estimated financial benefit 

Reunion has observed multiple sellers willing to accept pricing $0.03 to $0.04 below comparable spot pricing.

Buyer fact pattern

This strategy is best for buyers who have an actionable estimate of their tax liability into the next tax year. Unlike PTC strips, which we'll discuss next, forward ITC commitments need not necessarily come from an investment-grade buyer.

‍

Strategy 4: Buy multi-year PTC “strips”

Strategy 

Entering 2025, approximately 80% of §45 PTC opportunities in Reunion’s marketplace were multi-year strips, ranging from three to ten years. Although single-year (“spot”) transactions remain available, we have observed more and more developers defaulting to multi-year sales. 

Estimated financial benefit 

Depending on the duration of the strip, forward commitments are trading $0.010 to $0.020 below spot prices.

Buyer fact pattern

Since sellers often use forward sales to secure financing – which comes with creditworthiness requirements from lenders – they tend to require investment-grade ratings in their buyer counterparties.

The tax credit insurance market does offer credit support products for non-investment-grade buyers. This is a nascent and illiquid segment of the insurance market, however, and policies may be cost prohibitive. 

‍

Strategy 5: Look beyond §48 ITCs, §45 PTCs, and §45X AMPCs

Strategy

The Inflation Reduction Act (IRA) created or modified 11 transferable clean energy tax credits. The former group includes six credits:

1. §48E "technology-neutral" investment credit
2. §45Y "technology-neutral" production credit
3. §45U zero-emission nuclear production credit
4. §45Z clean fuel production credit
5. §45V clean hydrogen production credit
6. §45X clean advanced manufacturing production credit

As these credits become transactable with the release of guidance and the availability of supply, it's possible for "early" buyers to acquire credits at an assumed discount, before the broader market travels through a price discovery process.

Estimated financial benefit 

To understand the financial benefit of this strategy, we can examine the early days of the market for the §45X AMPC, which was among the new IRA tax credits.

The Treasury released §45X guidance in December 2023 that effectively unlocked the credit. Early transactions priced around $0.93 – with the exception of the First Solar-Fiserv deal – in what Reunion perceived as the beginning of a price discovery exercise. 

By Q3 of 2024, once a preponderance of buyers had become comfortable with the new credit and its inherent risks (or relative lack thereof), §45X AMPCs were trading around $0.95. Early buyers, therefore, enjoyed a $0.02 discount.

We expect this price discovery mechanism to play out for §45Z PTCs: Once the Treasury issues “unlocking” guidance, early adopters will enjoy outsized discounts until the broader market becomes comfortable with credit qualification standards that are specific to §45Z. 

Buyer fact pattern

We have found that emerging credits are generally the province of experienced buyers who have several §48, §45, and/or §45X transactions under their belt. These buyers have the internal capacity to “get smart” on new credits as well as key advisors already in place. As one experienced buyer has told us, "I'll take all the §45U I can get."

‍

Getting started

To explore these investment strategies, please contact Reunion's markets and transactions team.

‍