Certainty for Transferable Tax Credits after the OBBBA

On July 4, 2025, U.S. President Donald Trump signed the ‘One Big, Beautiful Bill Act’ (OBBBA) into law, signalling a new era for domestic energy providers and manufacturers. The legislation includes sweeping revisions to federal tax policy, including accelerated phase-outs of clean energy credits, heightened restrictions on foreign ownership, and the preservation and tightening of rules surrounding transferable tax credits. All this means the clean energy tax credit market is entering the second half of 2025 with both increased complexity and clarity.

Following the enactment of the OBBBA, the President instructed the Treasury Department to issue new guidance on the standards for beginning of construction, which were published August 15th, and have an impact as to which rules clean energy projects must adhere to. Our friends at the NYU Tax Law Center have a fulsome analysis which we’re directing our customers to read as they consider the implications of this guidance on their project finance planning. 

Despite changes to the tax credit ecosystem, the good news is that transferability is here to stay and has established itself as a lasting, valuable, and essential tool for both buyers and sellers. For clean energy developers and asset owners, transferable tax credits help unlock project capital without the constraints of a traditional tax equity structure, while corporate and institutional buyers see clean energy incentives as an attractive way to offset tax liabilities while supporting their decarbonization goals. Below, we explore the significance of sustained tax credit transferability, what the market could look like post-OBBBA, as well as key considerations and trends for both buyers and sellers.

State of the tax credit transferability market

Despite modifications to the clean energy tax credit market, transferability is still intact, signaling the commitment to flexible solutions that allow developers and asset owners to continue accessing liquidity and buyers to offset their tax liabilities. This dovetails with the transferable tax market’s growth in recent years, with estimates pegging credit transfers at a whopping $30 billion in 2024. 

On average last year, investment tax credit (ITC) pricing hit 92.5 cents, while production tax credit (PTC) pricing hit 95 cents, both up from 2023. At the same time, an independent study, published in December 2024, revealed that the clean energy tax credits made possible under the U.S.’s 2022 Inflation Reduction Act (IRA) have the potential to deliver “substantial economic benefits,” grow the U.S. economy by $1.9 trillion over the next 10 years, and deliver a 4x return on investment. 

These numbers will likely shift due to the recent passage of the OBBBA, which introduced significant revisions to clean energy tax credit law. It also added restrictions to foreign ownership, primarily regarding tax credit transferability. Projects owned by or transferring credits to specified foreign entities or foreign entities of concern are now either disqualified from claiming credits altogether or prohibited from participating in the transferable tax credit market. These provisions are intended to address the U.S.’s national security concerns and reflect the country’s growing scrutiny of foreign investment in domestic infrastructure.

What should developers and buyers expect?

While transferability remains a key financing tool for developers, the credits bought and sold will increasingly come from sectors including battery storage, nuclear, and geothermal. Market participants can also expect fewer solar and wind transfers after 2027, with sustained activity in newer technologies that allow transferable tax credits.

1. Battery storage continues

Battery energy storage systems (BESS) have largely been spared from the OBBBA cuts, and developers can still claim the transferable 48E ITC if domestic content and labor standards are met. This provision provides critical liquidity, enabling project owners and developers to sell their credits and reduce upfront capital burdens. As data centers and AI technologies fuel electricity demand, batteries are playing a growing role in grid reliability. With the BESS ITC remaining intact and transferable, we expect batteries to account for a rising share of tax credit transactions through 2033.

2. More nuclear and geothermal

The OBBBA retains the 45U nuclear energy credits, which qualify for transferability. Advanced nuclear projects that start construction before 2029 can also utilize the 45Y and 48E tech-neutral, transferable tax credits. This will support the U.S.’s nuclear energy market, with the nation expecting to triple its nuclear energy capacity globally by 2050. As a result, we expect nuclear tax credits to make up a greater portion of the market over the next few years.

Geothermal credits also survived the OBBBA’s legislative rewrite and will be phased out starting in 2034. However, transferability was repealed for projects that begin construction more than two years after the law’s enactment. Maintaining the geothermal credits is expected to promote the growth of geothermal energy across the U.S. In 2022, there were 3,965 megawatts (MW) of geothermal facilities in operation across the country, with generation growing at 3% per year. Generated electricity from geothermal sources is also forecast to increase to 37.2 billion kilowatt-hours (kWh) by 2050, up from 16.5 billion kWh in 2023, according to the University of Michigan’s Center for Sustainable Systems. We expect the geothermal tax credit market to be a contributing factor.

3. Shorter horizon for wind and solar tax credits

Due to the OBBBA, wind and solar energy projects are facing sharp cutbacks. To claim the ITC or PTC, wind and solar energy projects must begin construction before July 4, 2026, and be placed in service by December 31, 2027. This accelerated timeline makes future transfers rare beyond the early 2028 window, meaning solar and wind ITC and PTC credits will shrink as a proportion of the transferable tax credit market. At the same time, reduced wind and solar installations could hurt the sector. However, it could also mean that solar and wind developers will need to incorporate BESS as part of their projects to remain competitive.

4. Reduced Corporate Tax Appetite

The OBBBA has several major impacts which adjust corporate tax liability, one of the largest of which is the restoration of 100% bonus depreciation, making it permanent for qualified property acquired after January 19, 2025. This means that asset-heavy companies can immediately expense the full cost of eligible investments in the year they are placed in service (rather than "accelerating depreciation onto their books"), therefore reducing tax liability in 2025 and going forward. 

R&D (IRS terminology of R&E for Research & Experimentation) expensing is another major provision of the OBBBA that significantly impacts corporate tax liability. The OBBBA allows taxpayers to immediately deduct all domestic R&D expenditures paid or incurred beginning January 1, 2025. Under prior law, these expenditures for domestic R&D were required to be capitalized and amortized over five years.

What does the OBBBA mean for transferable tax credits?

Even with the OBBBA phaseouts and restrictions, transferability is still a critical mechanism to how clean energy projects get financed. For developers and asset owners, the ability to sell credits remains one of the most efficient ways to monetize value when tax appetite is limited. For corporate and institutional buyers and tax equity investors, transferable tax credits continue to offer an opportunity to reduce tax liabilities and support decarbonization goals.

All this means the transferable tax credit market is evolving, with the OBBBA introducing new requirements and due diligence tasks for developers and buyers. Platforms, like Basis Climate, that help manage registration, ensure compliance under Foreign Entities of Concern provisions, and efficiently pair buyers and sellers are becoming increasingly valuable. In this changing environment, transferability is a vital tool for both capital flexibility and mitigating tax exposure.

Ready to sell or buy transferable tax credits? Contact our team to get started.