FAQs

Investment Tax Credit (ITC)

What are Investment Tax Credits (ITCs), and how can we benefit from them?

ITCs provide a dollar-for-dollar reduction in federal income tax liability for qualifying energy projects. Projects like biochar and combined heat and power (CHP) may be eligible, and developers can monetize these credits through structured sales to corporate buyers.

What is the current market value of transferable tax credits?

In today’s market, transferable ITCs are trading at 88%–93% of their face value, depending on the project type, risk profile, and volume.

What kinds of risks need to be insured when selling tax credits?

There are two primary risks:

Basis Risk: Whether the IRS recognizes the full tax basis
Recapture Risk: Whether the IRS could claw back the credit

Insurance (typically costing 2–3%) covers both, giving confidence to buyers and project sponsors.

How much in tax credits do I need to make the process worthwhile?

Optimal execution typically begins around $75 million in cumulative credits. However, individual projects can start below that, especially if part of a larger pipeline.

Can I sell credits directly to a corporate buyer I know?

Yes, but direct deals often involve complex structuring, compliance, and negotiation. Dakota Ridge Capital can support even “warm” introductions with risk mitigation, insurance placement, and transactional support to ensure a smooth, bankable outcome.

Who are the typical buyers of tax credits?

Buyers are usually large corporations with predictable tax liabilities who seek to reduce their effective tax rate. Examples include Fortune 500 companies, banks, insurers, and energy-intensive manufacturers.

How does Dakota Ridge Capital help in this process?

We provide end-to-end assistance, including:

Credit structuring and eligibility review
Insurance sourcing
Buyer matchmaking and negotiations
Documentation and closing

Our goal is to maximize value while de-risking every step of the transaction.

Clean Energy Investment

What clean energy technologies are eligible for federal tax incentives in 2025?

Technologies include solar, wind, geothermal, bioenergy, hydrogen, nuclear, clean fuel reprocessing, carbon capture, and combined heat and power. Each may qualify under different sections of the Inflation Reduction Act.

How can I secure financing for a clean energy investment project?

Options include tax equity investors, green banks, federal and state grants, and traditional project finance. Advisors such as Dakota Ridge Capital can help structure deals for maximum credit monetization.

Can small-scale clean energy projects still benefit from federal tax credits?

Yes, projects of all sizes may qualify for ITCs or PTCs, though smaller projects often benefit from aggregation or being part of larger investment portfolios.

What’s the difference between ITC and PTC for energy developers?

ITC offers an upfront credit based on capital cost, while PTC provides a production-based credit over 10 years. Eligibility and project economics determine the optimal choice.

What role do green banks play in clean energy investments?

Green banks use public capital to mobilize private investment, often offering low-interest loans or credit enhancements for clean energy developers.

Fuel Investments

Are renewable fuel projects eligible for federal tax credits?

Yes. Qualifying fuels include renewable natural gas, sustainable aviation fuel (SAF), biodiesel, and clean hydrogen. Credits like 45V (Hydrogen) or 45Z (Clean Fuel Production Credit) may apply.

What is the Clean Fuel Production Credit (45Z)?

It provides a performance-based tax credit based on carbon intensity, applicable from 2025 to 2027. Eligible fuels must meet lifecycle greenhouse gas emission requirements set by the Treasury.

How do lifecycle emissions affect fuel credit eligibility?

Emissions are assessed using GREET models or other DOE-approved tools. The cleaner the lifecycle profile, the higher the credit amount.

What is 45V and how does it support hydrogen investment?

45V is the Clean Hydrogen Production Credit, providing up to $3/kg of hydrogen produced, tiered based on lifecycle emissions intensity. Projects must meet wage and apprenticeship standards to qualify for full value.

Can carbon capture projects also benefit from fuel investment incentives?

Yes. Carbon capture, utilization, and storage (CCUS) projects may qualify under 45Q, and their captured emissions can enhance the eligibility of clean fuel projects under 45Z.

The Inflation Reduction Act (IRA)

What are the major tax credits under the IRA for energy developers?

Key credits include 48 ITC, 45 PTC, 48E (tech neutral ITC), 45Y (tech neutral PTC),45Q (carbon capture), 45U (nuclear), 45V (clean hydrogen), 45X (advanced manufacturing), and 45Z (clean fuels). Bonus credits may be available for domestic content, energy communities, and meeting labor standards.

What are bonus credits and how can I qualify?

Bonus credits can add 10%–20% to your base credit. Common eligibility criteria include domestic content use, location in energy communities, or compliance with prevailing wage and apprenticeship rules.

What is the Energy Community Bonus Credit and who qualifies?

Projects located in areas with significant fossil fuel industry job loss, brownfields, or high unemployment may qualify. The bonus is 10% and requires specific documentation and geographic eligibility.

Are there penalties for failing to meet prevailing wage or apprenticeship requirements?

Yes. If developers fail to comply, the credit amount may be significantly reduced unless they correct the violation and pay penalties as outlined by the IRS.

What is the timeline for IRS guidance and implementation of IRA tax credits?

The IRS has issued guidance for many credits in 2023–2024, with updates ongoing. Developers should monitor IRS bulletins and engage tax professionals to remain compliant and eligible.

Can nonprofits or government entities benefit from IRA tax credits?

Yes. The IRA introduced direct pay (elective payment) for tax-exempt organizations, allowing them to receive a cash refund instead of a credit.

What is direct pay and how does it work under the IRA?

Direct pay allows tax-exempt entities to receive refundable payments equal to the credit value. Eligible entities include state/local governments, tribes, co-ops, and certain nonprofits.

You need a clean energy investment advisor you can trust.

With over 30 years in the industry, Dakota Ridge Capital founder Neil Winward is the right choice.

Reach out today to book a complimentary consultation to discuss your options and see if we'd be a good match for your investment needs.

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IRA Report To Smarter Investing

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