Energy management and automation firm Schneider Electric will invest in a portfolio of Texas-based clean energy projects using a tax credit transfer agreement for solar and battery storage systems developed, built and operated by ENGIE North America.
The projects are slated to come online this year, and these are Schneider’s first tax credit transfer positions taking advantage of the Inflation Reduction Act.
According to a release from Schneider, the act’s transferability clause enables the transfer of eligible federal tax credits from renewable energy, clean energy manufacturing and battery storage projects, among other clean energy projects.
This feature creates an alternative to traditional tax equity structures. Tax credit transfer also enables Schneider’s Scope 2 decarbonization when the investor-buyer procures associated environmental attributes as part of the transaction.
Schneider and ENGIE have worked together on distributed energy resources projects before. Starting in 2017, the companies helped clients source renewable energy through virtual power purchase agreements that totaled about 1.6 GW in North America.
Schneider was advised on the deal by consultants from its Sustainability Business. Schneider provides these consulting services on tax credit transfers to clients to help them take advantage of the innovative opportunities created by the IRA.
According to Schneider, estimates are that $1 trillion in public-private spending could be mobilized using these credits.
