Lenders are increasingly open to novel technologies like carbon capture, nuclear, and advanced manufacturing. But solar and storage still by far dominate — and policy uncertainty is likely to disrupt investment, especially in more nascent sectors.
This is one of the several conclusions from an inaugural debt capital market report by Crux, a sustainable finance platform that has marketplaces both for tax credit transfers and for other clean energy debt products.
“Whether the market continues its cycle of expansion or whether it recoils back to the most well established wind and solar projects will be a function of ongoing political processes,” found the Crux report, shared with Latitude Media before its publication today.
The company has historically reported on the growing tax credit transfer market. But this is the first report since Crux launched its debt capital marketplace in March. It covers market data from March and April of this year, and incorporates a survey of project finance lenders and investors in the clean energy space.
Since March, CEO Alfred Johnson said that Crux has issued about a billion and a half dollars in debt capital term sheets, and $700 million of those term sheets have been signed. “I think what that demonstrates is that there is a lot of need by developers to raise all different kinds of debt capital,” Johnson said. “And there’s a wide market of potential lenders that might lend into that market, but there’s an absence of liquidity.”
That is particularly true for emerging technologies. Capital is most widely available for solar and storage projects, which are among the industry’s most mature sectors. The survey found “nearly all investors at all stages of the development process” invest in solar. Accessing debt financing has historically been harder for advanced manufacturing, biofuels, carbon capture, and nuclear, though that’s beginning to shift, in part as a result of the “robust and progressively more liquid market for transferable tax credits.”
However, these dynamics are subject to change. The report’s data was pulled together before the House of Representatives passed the reconciliation bill, a piece of legislation that could upend the market by rapidly phasing out clean energy tax incentives.
If Congress walks back tax credit transferability, the report found, it will create a financing vacuum — and ultimately an even greater need for developers and manufacturers to have easy and efficient access to other types of capital, including debt.
The market’s evolution
Clean energy financing was not always a single market. For years, solar had its own (more established) funding dynamic, while advanced manufacturing or nuclear were considered entirely separate. But the 2022 passage of the Inflation Reduction Act made it possible for manufacturers and developers of a wide range of clean energy projects to transfer the tax credits, which led to a new way to finance those projects.
In the years since, the market has boomed. A February report by Crux found that the market for tax transfers in 2024 grew to nearly $30 billion in total deal volume, versus just $9 billion at the end of 2023.
The debt financing market is much larger: more than $230 million, according to Johnson’s estimate in a March interview with Latitude. However, the markets are growing alongside each other.
Tax equity deals have increasingly embraced a hybrid structure, known as a “t-flip.” These “explicitly contemplate the sale of a portion of tax credits in the transfer market,” and made up roughly 60% of the total tax equity committed in the United States in 2024; that share is expected to rise further.
Meanwhile, preferred equity structures anticipate that most or all of a project’s resulting tax credits will be transferred — and therefore influence the project’s overall capital requirements.
The report also found that tax credit bridge lending is becoming more accessible. This short-term financing tool allows projects to take out a loan against their eventual sale of tax credit, with terms driven by advance rates and the presence of an investment-grade buyer, among other factors.
“The same kinds of mechanisms that were traditionally used in categories like solar around tax equity — where you had some existence of loan types like tax equity bridge loans — became viable and relevant in other categories like advanced manufacturing and clean fuels that received the tax credits,” Johnson said. “And therefore you started to see a wider market for bridge loans than we saw before.”
The political risk calculation
According to Crux’s report, the expansion of debt capital markets will rely on a “stable and constructive policy environment,” something the Trump administration seems unlikely to provide. The policy volatility creates particular risk for newer technologies and markets, such as nuclear, manufacturing, and advanced biofuels.
Crux debuted two years ago as a platform for buying and selling clean energy tax credits, though Johnson said that expanding into the debt market was always a part of the plan. The reconciliation bill that passed last month in the House and currently under discussion in the Senate is a threat to the budding tax credit transfer market. The law would make sweeping cuts to wind, solar, hydrogen, and electric vehicle credits — and would dramatically scale back tax credit transferability for most technology types. Those sweeping changes surprised many policy observers.
But Johnson is optimistic about Crux and the market more broadly — remarkably so, given that just three months ago he told Latitude that while he expected some changes to the IRA, he wasn’t concerned that the rule enabling tax credit transfers would be undone for completed transactions, in part because Congress has “very rarely, if ever” retroactively changed the tax code to disadvantage the taxpayer.
Johnson believes that other factors are “more significant than policy” for driving the broader market: the rise of energy demand for the first time in decades, the return of U.S. manufacturing, and the growing awareness of the need for control and redundancy in supply chains.
“Those three dynamics have been driving the market for years,” Johnson said. “They have been catalyzed further by a policy environment that made it very conducive to build and invest in energy and manufacturing and minerals assets in the United States. But those three factors remain the case regardless of the policy environment.”
Whatever happens with the Trump administration’s approach to clean energy — and to transferability specifically — Johnson sees stability in some places. Nuclear, for instance, got favorable treatment in the House bill, and he sees an enduring need for more manufacturing and minerals infrastructure.
For projects that are fully contracted, he added, the survey indicated that lenders remain very interested — regardless of changes to the tax law.
“It’s less that in the absence of tax credits, no solar will be built. It’s that if you take tax credits away, then the amount of debt that the solar project needs is higher and the price that they need to charge for power is higher,” Johnson said. “But there’s a lot of market where there is still enough certainty to deploy capital.”
