LevelTen Energy announced the launch of the LevelTen Tax Credit Marketplace to facilitate the purchase and sale of federal clean energy tax credits, a key provision of the Inflation Reduction Act (IRA).
LevelTen’s newest marketplace enables corporations, tax advisors, and sustainability advisors to procure tax credits from a network of approximately 600 clean energy developers in the U.S. It also includes streamlined management of requests for proposals (RFPs), deal diligence, and transaction execution. Furthermore, tax credit buyers can leverage LevelTen’s full suite of transaction infrastructure – multiple clean energy marketplaces, transaction software, and data dashboards – to procure a power purchase agreement (PPA) or renewable energy certificates (RECs) in addition to tax credits.
LevelTen’s Tax Credit Marketplace enables buyers to create tax credit RFPs based on the amount of credits sought, type of technology desired, and other criteria. LevelTen socializes the RFP to its network of project developers and other entities with tax credits available to sell. LevelTen then collects the proposals, contextualizes them with market data, and delivers recommendations in a standardized format.
The platform also includes project maturity scores that factor in development milestones including interconnection status, meant to help tax credit buyers understand the likelihood of that project getting completed on time,
“It can be overwhelming for a buyer to evaluate all the options and select a project that best meets their needs,” said Patrick Worrall, Vice President of Tax Credit Marketplace at LevelTen Energy. “By working with LevelTen, buyers or their advisors get access to the whole tax credit market. We claim 90% market penetration of renewable developers active in the US. We drive compelling offers to our customers through a competitive process, and we support their process with data and expertise they need to select projects.”
GO DEEPER: Jose Zayas, EVP of Policy and Programs, American Council on Renewable Energy joined the Factor This! podcast to break down the key components of the historic Inflation Reduction Act, which includes $369 billion dedicated to clean energy and climate change.
The IRA’s “transferability” rule allows tax credit sponsors, including clean energy project developers, to transfer their tax credits by selling them for cash to corporations seeking to lower their tax burden. The U.S. Department of the Treasury just issued new guidance on Section 6418 of the Inflation Reduction Act (IRA) that allows clean energy tax credits to be monetized by directly transferring the credit to a taxpaying entity.
“Demand for tax credits is off to a good start, but we need a lot more to revolutionize project financing in the way the IRA intended. Developers are eager for more tax credit investors, and the clean energy transition is at stake,” Worrall said.
In 2023, the first year that the IRA tax credit market existed, over $2.5 billion of IRA tax credits were sold under the new transferability rules, according to publicly announced deals.
“Tax credit buyers make it possible for new clean energy sources to get added to the grid. Without these buyers, the projects won’t get built. A second-level benefit we see is corporate buyers using the profit from their tax credit transaction to support other sustainability programs,” Worrall said. “For example, tax credit profits can be considered against the cost of renewable energy purchases, which have increased in price by nearly 13% over the past year. While these are separate transactions, the overall cost of being a good steward of the environment comes down.”
