7 Steps to Sell Tax Credits for Clean Energy Projects

When the U.S. Inflation Reduction Act (IRA) passed in 2022, it enabled clean energy project developers and asset owners to sell tax credits to corporate buyers in exchange for cash. This helped provide renewables developers with much-needed access to capital and catalyzed a new financial market that saw tens of billions of dollars transacted just last year.

While the passage of the new reconciliation tax bill on May 22, 2025, effectively slashes the IRA, renewable projects that start construction within 60 days and are operational before the end of 2028 will be able to continue to leverage the benefits from these credits. The rollback will also substantially limit tax credit transferability, though nuclear developers will still be able to sell credits, which will be phased out at the end of 2031. Transferability for the 45X tax credit will also be slashed for components sold after Dec. 31, 2027.

In this comprehensive guide, we break down everything you need to know to sell tax credits before the deadline, as well as how to leverage effective planning and expert support to maximize your proceeds and minimize risk.

From tax equity to transferability

Historically, the primary pathway for monetizing federal clean energy incentives was through tax-equity financing. Under this model, developers partnered with institutional investors — often banks or large corporations with sizable tax liabilities — to finance projects in exchange for claiming credits. While this was helpful for utility-scale projects, tax equity deals were often criticized for being complex, costly, and exclusionary to smaller or newer market participants, creating significant barriers for both small- and mid-sized projects. The process also often involved ceding some ownership of the project, which was not ideal for developers.

In 2022, the IRA changed the game by allowing developers to sell tax credits directly to third parties through a simplified, one-time transaction. This streamlined the process by requiring no ongoing relationship between the seller and buyer, fewer intermediaries, and a broadening of the tax credit buyer base. Developers were able to benefit through faster liquidity, fewer roadblocks, and the ability to retain full project ownership while still capitalizing on the credits. It also acted as a catalyst for clean energy finance across the U.S.

Ending tax credit transferability and returning to the tax-equity model “would increase the private costs of investing in clean energy and slow investment,” according to a Harvard University professor. It would also reintroduce the structural inefficiencies that previously plagued the tax-equity market and would limit the growth of small- and mid-sized projects.

Which tax credits are eligible for transferability?

Developers are able to sell a broad range of credits before transferability ends. These include:

• 30C alternative fuel vehicle refueling property credit: This 30% tax credit qualifies for transferability and includes EV charging stations built by corporations, but it will end for all property placed in service after Dec. 31, 2025.
  
  
• 45X advanced manufacturing production credit: This incentive will only be available for wind energy components sold up until December 31, 2027, while all other components will have until December 31, 2031. Transferability is repealed for components sold after December 31, 2027.
  
  
• 45Y clean electricity production credit: To claim this incentive, developers must begin construction no more than 60 days after the enactment of the May 2025 tax reconciliation bill. These projects must also be operational by Dec. 31, 2029 to remain eligible.
  
  
• 48E clean electricity investment credit: To claim this incentive, developers must begin construction no more than 60 days after the enactment of the May 2025 tax reconciliation bill. These projects must also be operational by Dec. 31, 2029 to remain eligible.

The role of bonus ‘adders’ in the tax credit market

Tax credits may qualify for bonus incentives — also known as adders — that increase their overall value by up to 50%. There are three types of adder credits:

1. Domestic content: This credit achieves a 10% bonus for using manufacturing components and products that have been assembled in the U.S. to build clean energy projects.
   
   
2. Energy community: This credit achieves a 10% additional bonus for clean energy projects located in regions that have historically relied on fossil fuels.

3. Low-income community: This credit delivers a 10% or 20% bonus, depending on the category of award it receives, for clean energy projects located in or serving low-income communities and/or Indigenous land.

Breaking down the process to sell tax credits from clean energy projects

There are seven key steps for developers looking to sell tax credits before transferability ends. These include: 

1. Identifying a trusted advisor to help guide you along the process
2. Completing a cost segregation report
3. Finding a buyer and negotiating the term sheet and transfer documentation 
4. Registering with the Internal Revenue Service (IRS)
5. Completing due diligence requirements. 
6. Acquiring tax insurance, if required 
7. Finalizing the transfer and getting paid
   

1. Identify a trusted partner

Navigating the transaction, legal, and financial elements of a credit sale requires the relevant expertise. That’s why it’s important to work with a trusted partner that both offers advice and connects sellers with the appropriate buyers. An ideal partner also facilitates documentation and coordinates third-party services like cost segregation and tax insurance.

Platforms like Basis Climate streamline the process from end to end. Through our expert-led service, transparency, and a network of vetted buyers, we ensure your credits are marketed effectively and your deal closes smoothly. Whether you’re new to the market or managing multiple projects, the right partner helps you unlock the full value of your credits with minimal friction.

2. Complete a cost segregation report

A cost segregation report is a detailed analysis that identifies the parts of your project that are eligible to qualify for tax credits. It plays a critical role when it comes to establishing your cost basis, which directly affects the total value of your credit. Typically, third-party studies are required by credit buyers and insurers to ensure accuracy and mitigate IRS scrutiny. These studies look at investment tax credit- (ITC) eligible expenditures and determine applicable depreciation periods for each asset, which forms the foundation for the ITC calculation.

In scenarios involving a step-up in cost basis, where a project is sold to a related entity at an increased valuation, careful consideration is necessary. The IRS has issued guidance focused on basis-shifting transactions, particularly those between related parties, to prevent inappropriate tax benefits. To ensure compliance, developers should obtain independent third-party appraisals to substantiate the fair market value and maintain an arm’s-length relationship between entities. This approach helps validate the stepped-up basis and supports the legitimacy of the tax credit.

3. Find a buyer

Once your project is registered, it’s time to find a qualified buyer with a sufficient tax liability. The buyer pool is diverse, ranging from Fortune 500 companies to institutional investors, but each has unique preferences and requirements when it comes to deal structure, documentation, and timing. Navigating the tax credit market requires you to understand the buyer pool and how to present your project in a way that meets their criteria and risk tolerance.

This is where platforms like Basis Climate come in, directly connecting you with vetted buyers to accelerate the transaction timeline and improve deal security. More than just a listing service, Basis Climate facilitates the entire transfer process — including documentation, term sheet, negotiation, and insurance coordination — so you can close deals cool, calm, and collected.

4. Register your project with the IRS

Before you can sell tax credits, you must register your project with the IRS and get a registration number. This validates your eligibility to transfer the clean energy tax credits and is mandatory under Section 6418 (Transfer of Certain Credits) under the Department of the Treasury of the IRS. Developers are able to submit their information and receive a registration number through the IRS’ Energy Credits Online portal.

To ensure timely processing, the IRS recommends submitting your pre-filing registration as soon as possible after your project is placed in service and at least 120 days before filing your tax return. This allows sufficient time for the IRS to review your submission and request any additional details. Because most buyers require a registration number to complete a transaction, there is often a delay from when a project’s construction is complete and the seller is paid. It’s important to note that each registration number is valid for just one taxable year, meaning annual re-registration is necessary for multi-year credit claims.

5. Acquire tax insurance

Buyers of transferable clean energy tax credits often seek assurance that the credits they purchase are valid, transferable, and protected against potential recapture risk — the need to take back the investment that was previously transferred to another entity. Different tax insurance policies will cover different aspects of a transaction depending on its risks, which include the credit’s validity, the amount claimed, the risk of IRS recapture, and the potential disallowance of bonus adders like domestic content. Coverage is typically customized based on deal structure, the strength of the supporting documentation, and the financial profile of the parties involved.

Insurance has become commonplace when developers sell tax credits and is often critical to be able to attract top-tier buyers. It’s especially valuable in deals where the seller’s financial strength is uncertain or when the project involves complex compliance requirements. For example, if a project fails to meet prevailing wage standards, the IRS may recapture a significant portion of the credit, posing a substantial risk to the buyer. Tax insurance provides a safety net and helps buyers ensure they’re protected by these liabilities. However, in some cases, sellers with strong balance sheets or cash flow can use these as safeguards through guarantees to help protect buyers from liabilities.

6. Complete due diligence requirements

To complete the sale of transferable clean energy credits, both buyers and insurers require a thorough set of documents to perform due diligence. Typically, these include the developer’s cost segregation report, financial statements and projections, construction documentation such as contracts and invoices, documentation for the project’s bonus adders, evidence that the project has been placed in service, and proof of registration with the IRS.

Making sure these materials are complete, accurate, and promptly delivered is essential to closing the deal on time and securing payment. Incomplete or inaccurate information can lead to delays or potentially deal loss, which is why it’s important to carefully prepare all the documentation needed for the due diligence process.

7. Finalize the transfer and get paid

Once the due diligence process is complete and tax insurance is in place, the transaction moves into its final stage: executing the transfer and filing with the IRS. At this point, the seller and buyer have signed a final contract and agreed on a transaction date. The tax credits can only be transferred one time after the credit has been generated, and the transfer must occur before the seller or buyer file their own respective tax returns with the IRS (which can be as late as the extended filing date in September or October for calendar-year taxpayers).

What impacts tax credit pricing?

There are several factors that affect clean energy tax credit prices, including supply and demand in the market and the size of the credit. Smaller tax credits — those priced at less than $1 million — typically trade at large discounts of 84-86 cents per dollar, while production tax credits — those greater than $50 million — generally trade at a discount of 94-96 cents per dollar.

In addition to project type, pricing is influenced by the tax credit market’s maturity, as well as the credit’s opportunity cost and risk profile. While large credits benefit from access to the tax equity market, smaller credits lack this flexibility and are often sold at steeper discounts due to limited buyer demand. At the same time, sellers of large credits tend to have more leverage in negotiations due to their ability to attract tax equity financing, which brings in added financial benefits such as the ability to monetize depreciation. This makes bigger deals more attractive and gives sellers additional pricing power compared to smaller projects, which are often seen as more risky.

How Basis Climate helps you sell tax credits with ease

Developers that sell tax credits are facing the unprecedented opportunity to quickly — and easily — access much-needed capital to finance their projects before transferability ends. Basis Climate can help large, small, and mid-sized project developers ensure a timely, seamless, and friction-free transaction. Our expert-led team approaches deals with transparency, speed, and top-tier service to make sure you get the support you need — from buyer procurement, due diligence, tax insurance, and everything in between. Contact our team now to learn more.