Basis Climate, a New York City-based digital exchange for clean energy tax credits, has closed on a $100 million transfer of current-year production tax credits for a portfolio of operating wind power projects, the largest clean-energy tax credit transfer it has facilitated to date. The transaction took place a month after Basis launched its digital exchange.
“A key benefit of our exchange is efficient deal execution,” says Erik Underwood, Basis Climate co-founder and CEO. “The seller had multiple potential buyers, but our ability to independently test the market for real-time price discovery, and a simple 10-page contract reduced friction and costs. This enabled the seller to select the ideal buyer and close the transaction quickly.”
Terms of the transaction, and the identities of buyer and seller, were not disclosed.
Basis provides matchmaking between buyers and sellers of credits and offers a transaction framework and client support to guide both parties through the sale. Documentation, registration and compliance are all included as part of the platform, allowing both sides to transact with confidence.
“We are excited to see the industry as a whole start adapting to tax credit transfers, but we are most excited about providing efficient and transparent sale process for new buyers unfamiliar with these tax credits. This transaction solidifies Basis Climate’s position as a leading new entrant in this fast-growing market.”
A novel provision of the 2022 Inflation Reduction Act effectively created a market for clean energy tax credits by allowing for their one-time transfer to other federal tax paying entities – thereby making it easier for developers to raise the capital they need to finance their projects. Basis expects the annual transfer volume of clean energy tax credits to grow to over $60 billion by the end of the decade and is on track to being a significant player in this growing segment.
