Webinars and Events Careers Login
  • About
  • Sectors
  • Solutions
  • Success Stories
  • Insights
  • Contact

About Us

  • How we help you icon How We Help
  • Sustainability Transformation What is Sustainability Transformation
  • Leadership ENGIE Impact Leadership Team
  • Leadership Leadership Team, SRM Division
  • Corporate Sustainability Corporate Sustainability
  • Consultants Meet Our Consultants
  • Newsroom Newsroom
  • Diversity and Inclusion Inclusion at ENGIE Impact
  • Briefcase Careers
Contact Us

Sectors

  • Chemicals Chemicals
  • Consumer goods Consumer Goods
  • Food Beverage Food & Beverage
  • Healthcare Healthcare
  • Hospitality Hospitality
  • Mining metals Mining & Metals
  • Pulp Paper Pulp & Paper
  • Real Estate Property Real Estate & Property
  • Restaurant Restaurant
  • Retail Retail
  • Technology Technology
  • Telecom Media Telecom, Media & Entertainment
View All Sectors
  • Expense Data Management Utility Expense Management
  • Waste Consulting Services Waste Expense Management
  • EI icon telecom media Telecom Expense Management
  • Renewable Electricity Renewable Energy
  • Energy Supply Manager Services Energy Supply Management
  • Energy Manager Services Energy Management
  • Carbon Management Carbon Management
  • Waste Icon Total Waste Management
  • Ellipse platform Ellipse - Reporting Platform
  • About
    • About
    • How we help you icon How We Help
    • Sustainability Transformation What is Sustainability Transformation
    • Leadership ENGIE Impact Leadership Team
    • Leadership Leadership Team, SRM Division
    • Corporate Sustainability Corporate Sustainability
    • Consultants Meet Our Consultants
    • Newsroom Newsroom
    • Diversity and Inclusion Inclusion at ENGIE Impact
    • Briefcase Careers
    • Contact Us
  • Sectors
    • Sectors
    • Chemicals Chemicals
    • Consumer goods Consumer Goods
    • Food Beverage Food & Beverage
    • Healthcare Healthcare
    • Hospitality Hospitality
    • Mining metals Mining & Metals
    • Pulp Paper Pulp & Paper
    • Real Estate Property Real Estate & Property
    • Restaurant Restaurant
    • Retail Retail
    • Technology Technology
    • Telecom Media Telecom, Media & Entertainment
    • View All Sectors
  • Solutions
    • Solutions
    • Gradient Capabilities SRM simplified Resource Management
      • Resource Management
      • Expense Data Management Utility Expense Management
      • Waste Consulting Services Waste Expense Management
      • EI icon telecom media Telecom Expense Management
      • Renewable Electricity Renewable Energy
      • Energy Supply Manager Services Energy Supply Management
      • Energy Manager Services Energy Management
      • Carbon Management Carbon Management
      • Waste Icon Total Waste Management
      • Ellipse platform Ellipse - Reporting Platform
      • Learn More
  • Success Stories
  • Insights
  • Webinars and Events
  • Careers
  • Login
  • Contact

Why Savvy Corporates are Making Solar Tax Equity Investments

Article | Read Time 3 MIN
See All Insights
Charles Benisch Senior Director, Renewable Advisory
Decarbonization
Renewable Energy
Solar Power
March 28, 2023

Securing a budget for sustainability initiatives can be challenging in the best of times, but it can become even more challenging when companies are stressed by inflationary pressures and economic uncertainty.

In times like these, companies tend to manage cash more tightly and seek predictable returns for any investment that’s not directly tied to operations. To continue making progress against targets, sustainability leaders must present a business case rooted in cost avoidance, budget certainty, and economic benefit.

Fortunately, the Inflation Reduction Act’s expansion of the solar investment tax credit (ITC) opened ample opportunities for renewable energy buyers to:

  1. Source renewable energy certificates (RECs) for their carbon reduction programs
  2. Achieve an 8-12% return on investment in approximately 5 to 7 years
  3. Payback quickly (< 2 years) and exceed internal hurdle rates
  4. Reduce tax liability to improve the bottom-line

While securing buy-in and achieving budget certainty can be a challenge, tax equity investments offer solutions to manage risk and achieve sustainability goals.

Learn How to Keep Your Organization's Decarbonization Momentum Going. Read Report →

The Challenges Securing Buy-in and Achieving Budget Certainty

Renewable Energy Certificates

At the end of 2020, there were 620 members of the Science-based Targets Initiative (SBTi) – 620 companies that had publicly pledged to reduce their greenhouse gas emissions in line with climate science. By March of 2023, that number grew 7.5x. There are now 4,600+ organizations that have made public SBTi pledges. The rapid expansion of companies with these pledges is a positive signal in the fight against climate change, but it is also an inflationary signal for the cost of RECs as more companies compete for scarce renewable energy resources. Companies that rely on conventional REC purchases to reduce their reportable emissions will remain price-takers in a market with exponentially growing demand and inelastic supply.

Power Purchase Agreements

Power Purchase Agreements (PPAs) and Virtual Power Purchase Agreements (vPPAs) have emerged as cost-effective tools to limit exposure to increasing REC costs. According to public PPA announcements tracked by Bloomberg New Energy Finance, 225+ companies have made public PPA/vPPA purchases in the US.

While these products have proven to be efficient and cost-effective renewable energy tools for many organizations, securing approval for 12+ year agreements that can render millions in negative cash flow can be challenging. What’s more, credit requirements and security postings are increasing as financiers for renewable energy projects have become more conservative during these economic headwinds.

The Solution: Managing Risk with Tax Equity Investments

For organizations challenged to secure a budget for decarbonization programs, tax equity investments may be an ideal solution.

Tax equity investors invest a portion of the cash needed to develop a solar project. In exchange for their investment, investors receive federal tax benefits and project revenues. Project RECs can sometimes be included in the investment; other times project revenues can be utilized for unbundled REC purchases to avoid unfavorable P&L impacts.

Tax equity can often be either a component or cornerstone of a successful renewable energy strategy, as it offers:

  • Safe Investment: Tax equity investments typically return capital in less than 2 years with a defined ROI
  • High Yields: With typical ROIs ranging from 8-12%, yields are often higher than risk-adjusted internal hurdle rates
  • Emission Reductions: Project cash flows can be used to source renewable energy certificates that reduce the investor’s greenhouse gas emissions

With the expansion of the solar investment tax credit and the option of tax equity investments, companies can achieve predictable returns while reducing their carbon footprint. By aligning multiple and often competing business priorities such as tax, finance, and sustainability strategies, organizations can gain broader stakeholder consensus with fewer obstacles. As a relatively low-risk, high-return decarbonization solution, tax equity investments can help sustainability leaders present a solid business case that can achieve the speed and scale needed for ambitious decarbonization programs.

Get In Touch

Let's work together to tackle your renewable energy strategy.

Contact Us

Explore More

2024 Net Zero Report

Our most recent Net Zero Report explores whether companies are making the necessary fundamental changes to their business in order to achieve long-term decarbonization success.
Read Report

Holistic Corporate Decarbonization: Integrating Enterprise Programs

An organization’s decarbonization program will only be successful if it’s treated holistically, and fully integrated within the enterprise organization.
Read Article

Renewables & Your Energy Management Strategy

Hundreds of billions of dollars are invested in renewable energy projects each year, and that number will continue to increase as costs decline, stakeholder pressure increases, and renewable requirements are expanded—making now the time to act.
Read eBook

Related

Weekly Energy Market Watch The Business Case for Renewable Energy Tax Credits: Financial Benefits and Beyond Powering a Sustainable Future: Best Practices in Renewable Energy Reporting
How We Help Investor Relations Contact Us Newsroom Cookie Notice Privacy Policy Ethics & Compliance Platform Expertise Sustainability Success Stories Sectors Suppliers Insights
Sign up for updates
© 2025 ENGIE Impact All rights reserved.