Dive Brief:
- Schneider Electric has purchased clean energy tax credits from solar photovoltaic module manufacturer Silfab Solar, with sustainable finance tech company Crux facilitating the transaction, the companies announced Thursday.
- The purchase was made through the Schneider Electric Sustainability Business, exchanging Silfab’s 45X Advanced Manufacturing Tax Credits for funding the solar panel manufacturer will use to expand North American operations.
- The deal is made possible due to the transferability provisions included in the Inflation Reduction Act, that allows clean energy manufacturers to trade earned tax credits for cash. Hans Royal, senior director of renewable energy and carbon advisory for Schneider Electric’s sustainability services, told ESG Dive the transferability mechanism is a “revolutionary development” for the energy industry.
Dive Insight:
Schneider Electric said Crux played a “significant role in facilitating and streamlining” the transaction and credited the sustainable finance company for first connecting the energy management company with Silfab.
The company is looking to leverage the IRA’s transferability provisions to “foster the development of renewable energy infrastructure and contribute to a more sustainable planet,” Aamir Paul, president of North America Operations at Schneider Electric, said in the release.
The IRA’s tax credit transferability “significantly enhances Schneider Electric's ability to support the clean economy, reinforcing our leadership in the energy transition,” Royal said in an emailed statement to ESG Dive. “We are excited to announce multiple successful tax credit transferability transactions, showcasing the feasibility and benefits of these innovative deals.”
Crux CEO and Co-founder Alfred Johnson called Silfab a leader in the “booming” sector of domestic energy component manufacturing. Johnson said this represents Silfab’s first sale of 45X tax credits, which provide tax breaks for eligible products made in the U.S., such as solar modules, cells, wafers and polysilicon.
“This deal exemplifies how the transferability of tax credits is [a] win-win: providing simple, efficient access to capital to support Silfab's expansion while allowing Schneider to make additional investments in the growth of the clean energy industry," Johnson said in the release.
The deal follows another tax credit transfer agreement Schneider Electric inked with Engie North America in February. Schneider Electric expects the credits generated by that deal will get the company closer to its goal of utilizing 100% renewable energy in North American operations and, in turn, reduce its scope 2 greenhouse gas emissions.
Schneider Electric said its Sustainability Business is working to advise “many other corporations” on how to navigate tax credit purchasing opportunities, according to the release. Crux released a study in January that found between $7 billion and $9 billion worth of tax credit transactions took place last year and later predicted that the market will reach $85 billion annually by 2031.
