Energy Tax Credits: 5 Proven Strategies Institutional Investors Use to Cut Tax Bills and Win on Both Fronts

Energy tax credits may be the most underutilized tool in the institutional investor’s arsenal, with a program now projected to issue close to a trillion dollars in credits over the next decade.

Ryan Miller BSc., MFin. | Host, Making Billions Podcast | LinkedIn

Key Takeaways on Energy Tax Credits

• Understand how energy tax credits function as dollar-for-dollar offsets against federal tax liability, making them fundamentally different from standard deductions for institutional investors and family offices.
• Discover why the Inflation Reduction Act of 2022 made energy tax credits transferable, opening an entirely new category of tax efficiency opportunity that did not previously exist for passive income earners.
• Learn how investors can consider purchasing energy tax credits directly in the open market at a potential discount, allowing them to explore reducing their effective tax liability on passive and C-corporation income.
• Explore the difference between Investment Tax Credits and Production Tax Credits so fund managers can better understand which structure may align with different project and portfolio objectives.
• Consider how commercial solar and other renewable energy projects now offer institutional capital a dual-track opportunity involving both direct investment economics and transferable energy tax credits.

Energy Tax Credits Explained: What Every Fund Manager Needs to Understand

Energy tax credits represent one of the most powerful and least discussed tools available to institutional investors, and understanding how they function starts with a simple distinction. According to Nate Bradshaw, co-founder and COO at B10 Energy, an energy tax credit operates like an IRS gift card, providing a dollar-for-dollar elimination of your tax bill rather than simply reducing the income used to calculate that bill. Bradshaw explains that if an investor owes $10,000 in taxes and holds a $10,000 energy tax credit, the result is a $0 tax liability.

Energy tax credits have existed in the United States tax code since largely the 1990s, but the current opportunity for institutional investors is driven by a recent structural change. The passage of the Inflation Reduction Act in 2022 made these energy tax credits transferable for the first time, meaning they can now be bought and sold on the open market between parties. This single change fundamentally restructured how energy tax credits interact with private equity funds, family offices, and high-net-worth individuals who carry significant passive income liabilities.

Before transferability, accessing energy tax credits required a direct investment stake in a qualifying renewable energy project. Because some projects generate $80 million or more in tax benefits, very few investors had enough tax liability to absorb credits of that scale, which kept the market narrow. The transferability mechanism solved this structural problem by separating the energy tax credit from the underlying project, creating a functioning secondary market where energy tax credits can now flow to whoever has the tax liability to use them most efficiently.

For fund managers and institutional allocators evaluating this space, the IRS guidance on Inflation Reduction Act credits provides the regulatory foundation for understanding how these credits are structured, qualified, and transferred. Energy tax credits are an educational topic every sophisticated allocator should add to their institutional knowledge base.

Energy Tax Credits: Understanding Investment Tax Credits Versus Production Tax Credits

Energy tax credits come in two primary forms, and according to Bradshaw, understanding the distinction between them is essential for anyone evaluating either side of a renewable energy transaction. Investment Tax Credits, commonly referred to as ITCs, are issued based on the capital cost of a qualifying project at the time it is placed into service. Production Tax Credits, known as PTCs, are issued on an ongoing basis tied to the actual energy output of the project over its productive life.

Bradshaw explains that when a project qualifies for energy tax credits, the developer must choose one structure or the other in most cases. With ITCs, a project costing one million dollars might generate 40% of that figure in transferable energy tax credits depending on geographic zone and other qualifying requirements, meaning $400,000 in credits could potentially be sold for cash to fund project development or debt reduction. With PTCs, the credits accumulate each year relative to the megawatt output of the project, providing a recurring stream of transferable energy tax credits rather than a single upfront allocation.

The strategic decision between ITCs and PTCs is typically made by the project developer based on their capital structure objectives, investment timeline, and the specific production profile of the asset. For investors purchasing energy tax credits rather than developing projects, Bradshaw notes that both ITC and PTC credits function identically from a tax offset perspective: they reduce passive income or C-corporation income on a dollar-for-dollar basis, and buyers benefit regardless of which credit type they acquire so long as they purchase at an efficient price. The Investopedia overview of tax credits offers additional context on how credits differ from deductions in the broader tax planning framework.

How Energy Tax Credit Transferability Created a New Institutional Market

Energy tax credits became a new asset class for institutional capital the moment transferability was introduced through the Inflation Reduction Act in 2022, and the scale of capital formation that followed has exceeded early projections significantly. Bradshaw explains that when these energy tax credits first became transferable, the Congressional Budget Office offered initial estimates suggesting the program might generate approximately $300 billion in credits over the following decade. That figure has since been revised substantially upward.

According to Bradshaw, updated projections now indicate that the program is expected to issue closer to one trillion dollars in energy tax credits over the next ten years. He attributes this revision to the volume of capital already flowing into the renewable energy sector and the speed at which new projects are being developed and placed into service. Bradshaw notes that something in the range of $50 to $60 billion in new capital has already entered the space within the first couple of years following the IRA passage, driven directly by the change in credit transferability economics.

The institutional implications of this market scale are significant for fund managers who are building or advising on portfolio construction strategies. Energy tax credits now represent a functioning secondary market where sophisticated allocators can consider purchasing a dollar of tax offset for somewhere between $0.85 and $0.95 depending on their sourcing approach, project diligence, and market access. The emergence of platforms such as Crux Climate, which Bradshaw specifically recommends as a starting point, has accelerated price discovery and market participation for energy tax credits broadly.

Energy Tax Credits: A Practical Buying Framework for Institutional Investors

Energy tax credits can be accessed through two primary channels, and Bradshaw outlines both in practical terms that fund managers and family office allocators can immediately apply. The first channel is through a marketplace platform, with Bradshaw specifically recommending Crux Climate at cruxclimate.com as a resource he personally uses and trusts for sourcing energy tax credits. On the Crux platform, investors can create accounts, browse available credits from project developers, review sourcing details, and see current bid pricing across the supply side of the market.

According to Bradshaw, public marketplace pricing for energy tax credits tends to range between $0.91 and $0.95 per credit in the current market environment, reflecting the supply-demand dynamics of an early-stage but rapidly growing market. The second channel is going direct to project developers, which Bradshaw explains can allow buyers to access energy tax credits at a more favorable price point, typically in the range of $0.85 to $0.89 per credit for those willing to perform additional due diligence on the underlying project. This approach requires more work from the buyer but may result in a more favorable overall transaction for investors with significant tax liabilities and the capacity to evaluate project quality independently.

Bradshaw illustrates the economic logic in straightforward terms: an investor with a million-dollar tax liability who purchases energy tax credits at $0.85 per credit effectively acquires a million dollars of tax offset for $850,000, retaining $150,000 that would otherwise have been paid to the IRS. The hypothetical discount range he describes across both marketplace and direct sourcing approaches is approximately 10 to 15 percent of the face value of the tax liability being offset. Fund managers considering this framework should consult with qualified tax counsel before executing any credit transfer.

Energy Tax Credits as a Passive Income Offset Strategy for Family Offices

Energy tax credits are particularly relevant for a specific profile of institutional investor that Bradshaw describes in detail: high-net-worth individuals and family offices carrying significant passive income liabilities. Real estate investments, private equity distributions, and other alternative assets income streams typically generate passive income that accumulates substantial federal tax liability, and energy tax credits issued under the IRA can be applied directly against this category of income when properly structured.

Bradshaw explains that C-corporations also represent a strong use case for energy tax credits, noting that the income classification rules for C-corps allow tax credits to offset corporate income in a way that makes the economics compelling for operating businesses with consistent earnings. Unlike individual investors where passive versus active income distinctions matter significantly, C-corp income mechanics allow energy tax credits to function broadly against the corporation’s federal tax liability. This creates a meaningful planning consideration for fund managers who are evaluating whether fund structure affects the utility of these credits for their investor base.

Foreign investors represent another dimension of this market that Bradshaw addresses. Prior to transferability, foreign capital had limited ability to participate in the tax benefits generated by domestic renewable energy projects because US federal tax credits have no utility to non-US taxpayers. Transferability resolved this by allowing foreign investors to participate in the project economics while domestic investors acquire and use the energy tax credits independently. Bradshaw describes this as a significant catalyst for foreign direct investment into US energy infrastructure, because project economics now function differently when credit monetization is separated from project ownership.

Energy Tax Credits and Commercial Solar: Entry Points for Institutional Capital

Energy tax credits are most accessible to institutional investors entering the renewable space through commercial solar, according to Bradshaw, because of the range of project sizes and capital requirements that solar accommodates relative to other renewable categories. While hydrogen, wind, and other clean energy infrastructure projects may require hundreds of millions of dollars in capital stack formation, commercial solar projects can accept investments across a much broader range. Projects start from approximately one million dollars and scale to multi-hundred megawatt solar farm developments.

Bradshaw explains that commercial solar also provides investors with direct access to the dual economics he describes throughout the episode: the underlying project investment return and the transferable energy tax credits generated by the project. Developers building commercial solar projects can choose to sell off the ITC credits associated with the project, bringing in additional capital that improves project-level returns and makes the overall investment economics more attractive to outside allocators. This mechanism is what Bradshaw means when he says the transferability has changed the way projects pencil entirely compared to the environment that existed prior to 2022.

For fund managers evaluating direct project investment versus energy tax credit-only acquisition, Bradshaw suggests the decision often comes down to investment size, existing tax liability profile, and appetite for project-level due diligence. Investors with large passive income liabilities and limited bandwidth for project underwriting may find the credit-buying approach more efficient, while those with deeper energy sector expertise and capital to deploy may prefer the combined return profile of direct project participation plus credit monetization. Bradshaw notes that geographic considerations also matter, with Southern Belt states such as Texas and Oklahoma currently generating a significant share of new renewable project activity and energy tax credit supply.

Energy Tax Credits and Policy Durability: What Fund Managers Need to Assess

Energy tax credits derive their value from federal legislation, and any serious institutional investor must evaluate the policy risk associated with programs that can theoretically be amended or repealed through the legislative process. Bradshaw addresses this question directly, acknowledging that the current political environment, including public statements from former President Trump opposing the Inflation Reduction Act, creates legitimate questions that sophisticated investors are right to raise before committing capital or energy tax credit-buying programs at scale.

However, Bradshaw explains that his assessment, and the consensus view he observes among practitioners working actively in the space, is that material changes to energy tax credits are unlikely for at least the next ten years. The reasoning he provides is grounded in congressional dynamics rather than executive preference: even within the Republican caucus, legislators representing Southern Belt states that have attracted significant renewable energy investment have publicly resisted IRA repeal, because those energy tax credit flows are generating economic activity and jobs within their districts. Bloomberg reporting on Republican congressional resistance to IRA repeal documents House Republicans breaking with executive-level opposition to defend the program on constituent economic grounds.

Bradshaw also frames the energy investment thesis as a demand-driven reality that transcends political preference. He argues that the growth of artificial intelligence, digital assets, and other computation-intensive technologies is creating structural demand for electricity at a scale that requires investment across every energy source category simultaneously. In his view, the United States needs more oil and gas, more nuclear, more hydrogen, more solar, and more of every other form of energy production, which means the government’s incentive to keep directing private capital into energy infrastructure through energy tax credits remains strong regardless of which party controls the White House.

For Fund Managers Raising $10M to $500M+

The Room You Have Been Trying to Get Into

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Host, Making Billions Podcast
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About the Guest

Nate Bradshaw is the co-founder and Chief Operating Officer of B10 Energy, a firm specializing in energy tax savings for private equity funds and family offices. According to the episode, Bradshaw works with institutional clients representing over $20 billion in assets under management, helping them access transferable renewable energy tax credits to create tax efficiency across passive income and C-corporation income structures.

Bradshaw can be reached through the B10 Energy website at b10energy.com, by email at nate@b10energy.com, or via LinkedIn by searching Nate Bradshaw. He welcomes conversations with investors, fund managers, and project developers interested in energy tax credits, project investment opportunities, or introductions within the renewable energy and private equity space.

Topics Covered in This Article

• How energy tax credits function as dollar-for-dollar federal tax offsets for institutional investors
• The impact of the Inflation Reduction Act of 2022 on energy tax credit transferability
• Investment Tax Credits versus Production Tax Credits: key structural differences
• How to buy energy tax credits through marketplace platforms such as Crux Climate
• Energy tax credits as a passive income offset strategy for family offices and high-net-worth investors
• Direct developer sourcing of energy tax credits and the potential pricing advantages it offers
• Commercial solar as an institutional entry point for energy tax credit investment
• Policy durability analysis for energy tax credits under current and future legislative environments
• How foreign direct investment interacts with transferable energy tax credits
• The projected growth of the energy tax credit market toward one trillion dollars over the next decade

Energy Tax Credits Due Diligence: What Institutional Investors Must Verify Before Buying

Energy tax credits represent a genuine tax efficiency opportunity, but Bradshaw is clear throughout the episode that buyers must apply rigorous due diligence to any credit purchase before executing a transfer. The core risk he identifies is not the energy tax credit program itself but rather the quality and compliance status of the underlying project from which the credits were generated. Investors purchasing energy tax credits must verify that the project developer has properly placed the asset into service, that the qualifying requirements under the applicable ITC or PTC framework have been met, and that the credit transfer documentation has been correctly structured under IRS guidelines.

Bradshaw explains that working with an experienced intermediary or adviser with direct project sourcing relationships is one of the most practical ways institutional buyers can manage the documentation and compliance risks associated with energy tax credit acquisition. The difference between marketplace purchases and direct developer relationships is not only price but also the depth of project-level information available to the buyer during the diligence process. For institutional buyers with significant tax liabilities, Bradshaw notes that the additional effort required to source energy tax credits directly from developers often produces both better pricing and greater transparency into the credit’s origin and qualification basis.

Tax counsel involvement is non-negotiable in any well-structured energy tax credit transaction, and this is a point Bradshaw emphasizes when addressing both buyer and seller mechanics. The IRS Notice 2023-29 on energy community bonus credits provides detailed regulatory guidance on qualifying requirements that buyers and their advisers should review as part of any credit acquisition process. Fund managers who incorporate energy tax credits into portfolio-level tax planning strategies should ensure their general counsel and outside tax advisers are aligned on transaction structure before capital is committed.

Energy Tax Credits and Fund Structure: What General Partners Need to Know

Energy tax credits interact differently with fund structures depending on how a vehicle is organized, and Bradshaw addresses this dimension of the topic in terms that general partners and fund managers can apply directly to their own capital structures. For pass-through entities such as limited partnerships and LLCs taxed as partnerships, the passive income classification rules that govern individual investors also govern how energy tax credits can be allocated and used at the LP level. Fund managers building vehicles around renewable energy project investments must think carefully about how credit generation and transfer mechanics interact with LP income classification from the outset.

Bradshaw’s observation that C-corporations represent a particularly strong use case for energy tax credits has direct implications for fund managers who are advising corporate LP relationships or managing capital on behalf of operating businesses with significant annual tax liabilities. C-corp income mechanics allow energy tax credits to function broadly against federal tax liability without the passive versus active income distinctions that complicate individual investor planning, making the corporate buyer profile one of the most efficient counterparties in the credit market. General partners who have LP relationships with family-owned operating businesses or corporate investors should consider whether introducing energy tax credit education into their LP communication strategy could create additional relationship value and capital retention benefits.

The foreign investor dynamic Bradshaw describes also has fund-level implications worth understanding for managers raising money from international institutional sources. Foreign LPs investing in US renewable energy projects can participate in project economics under the post-IRA transferability framework without requiring access to US federal energy tax credits that would otherwise have no utility to a non-US taxpayer. The SEC’s guidance on investment company structures and foreign investor considerations provides a regulatory reference point for fund managers evaluating how to structure vehicles that accommodate both domestic credit buyers and foreign project investors simultaneously.

Energy Tax Credits in the Context of AI-Driven Energy Demand Growth

Energy tax credits are not being issued into a static demand environment, and one of the most compelling arguments Bradshaw makes for the long-term durability of the renewable energy investment thesis is rooted in the structural electricity demand being created by artificial intelligence infrastructure. Bradshaw explains that the computational requirements of AI systems, digital asset networks, and other data-intensive technologies are producing electricity demand at a scale that requires the United States to expand energy production across every available category simultaneously. This demand reality, he argues, is ultimately more consequential for the energy investment outlook than any single piece of legislation.

The implication for fund managers assessing energy tax credits as a long-term strategy is that the underlying project pipeline generating these credits is being sustained by genuine infrastructure demand rather than purely by policy incentive. Commercial solar projects, wind installations, and other renewable assets that generate transferable energy tax credits are being built to meet real load requirements from data centers, hyperscale computing facilities, and the broader electrification of industrial and consumer activity. Bradshaw’s framing suggests that the economic case for renewable energy investment exists independently of the tax incentive layer, with energy tax credits providing an additional efficiency mechanism on top of a project thesis that already pencils on power purchase agreement economics alone.

For institutional allocators building long-duration infrastructure portfolios, this convergence of structural electricity demand and federal tax incentive creates a context where energy tax credits are not just a short-term efficiency play but a component of a broader energy infrastructure allocation thesis. Bradshaw’s view, as expressed throughout the episode, is that investors who understand both the tax mechanics and the underlying demand dynamics are better positioned to evaluate the full opportunity set than those approaching energy tax credits through a purely tax-planning lens. Harvard Business Review’s analysis of AI and energy transition acceleration provides additional institutional framing on how technology-driven electricity demand is reshaping capital flows into the energy sector.

Energy Tax Credits: A Starting Framework for Fund Managers Ready to Explore This Space

Energy tax credits offer institutional investors a practical and educationally rich area to develop competency in, and Bradshaw closes the episode with a clear and actionable set of starting points for those who want to move from awareness to informed evaluation. The first step he recommends is visiting the Crux Climate marketplace at cruxclimate.com, creating an account, and spending time reviewing the supply side of the market to understand current energy tax credit availability, project sourcing geography, and prevailing bid pricing. This market-level education requires no capital commitment and gives investors a direct view of how the transferable energy tax credit market functions in practice.

Bradshaw recommends that investors who have significant passive income or C-corporation tax liabilities begin by quantifying the scale of their annual federal tax exposure before evaluating energy tax credit purchase sizing. Understanding your liability profile is the necessary precondition for determining whether energy tax credits represent a meaningful efficiency opportunity at your scale, since the math only becomes compelling when the credit purchase volume is large enough to justify the transaction and due diligence costs involved. Bradshaw and the team at B10 Energy work directly with family offices and private equity funds carrying the kind of tax liabilities where these mechanics become institutionally significant, and he invites fund managers and investors to reach out through b10energy.com or via email at nate@b10energy.com to begin that conversation.

The broader message Bradshaw delivers across the episode is that energy tax credits represent an area where institutional education has historically lagged the opportunity, and that gap is narrowing rapidly as more capital allocators become aware of the post-IRA market structure. Fund managers who build fluency in this space now are better positioned to serve their LP base, evaluate co-investment opportunities alongside credit economics, and identify project developers who can provide both investment returns and transferable energy tax credit supply. The Investopedia overview of the Inflation Reduction Act remains a useful foundational resource for investors who want to ground their understanding of energy tax credits in the legislative context before pursuing more advanced due diligence.

For Fund Managers Raising $10M to $500M+

The Room You Have Been Trying to Get Into

The fund managers closing institutional LPs are not smarter than you. They are better positioned. Fund Raise Capital works exclusively with alternative asset managers who are serious about building a capital raising machine — not guessing their way through LP conversations.

This is not a course. This is not a community. This is direct access to the frameworks, relationships, and infrastructure used by fund managers operating at the highest levels of the alternative asset industry.

Ryan Miller BSc., MFin.
Host, Making Billions Podcast
Founder, Fund Raise Capital
Built for fund managers and capital raisers working in the $10M to $500M+ range.

Book Your Strategy Call →

About the Guest

Nate Bradshaw is the co-founder and Chief Operating Officer of B10 Energy, a firm focused on energy tax savings for private equity funds and family offices. According to this episode, Bradshaw works with institutional clients representing over $20 billion in assets under management, helping them access transferable renewable energy tax credits to pursue tax efficiency across passive income and C-corporation income structures.

Bradshaw can be reached directly through the B10 Energy website at b10energy.com or by email at nate@b10energy.com. He welcomes outreach from investors, fund managers, and project developers interested in exploring energy tax credits, project investment opportunities, or introductions within the renewable energy