Sparkfund has announced the sale of Inflation Reduction Act (IRA) investment tax credits (ITC), valued at a quarter of a million dollars, to an individual taxpayer. Sparkfund partnered with Secured Carbon to qualify and transfer a bundle of ITCs from six electric vehicle (EV) charging facilities in California and Georgia.
The chargers were contracted by a municipality, a multi-family residential company, and an auto manufacturer. The buyer, a high-net-worth retiree in New York City, acquired these tax credits at a discounted price, reducing their tax liability while allowing the EV charger owners to immediately and seamlessly monetize the credits. The transaction demonstrates how individual taxpayers can take direct action to fund and accelerate the clean energy transaction while also improving their bottom line.
“Previously, mainly large corporate entities have been able to take advantage of the ITCs,” said Jonathan Plowe, president of Sparkfund. “The benefits have been limited to utility-scale projects and large portfolios of solar assets whose credits were most often acquired by large, corporate entities via onerous tax equity structures. In partnership with Secured Carbon, we are using the IRA’s tax credit transfer provision to give ITC benefits from distributed assets to smaller companies and individual buyers. We are democratizing the clean energy transition.”
The US Treasury reported in March 2024 that 45,000 IRA projects had been registered by 500 companies.
“A very small number of companies are registering nearly all of the credits,” said Dan Wynne, COO at Carbonplace, a Carbon Credit exchange. “Sparkfund and Secured Carbon enabling new entrants to register and sell credits is a game changer for both sellers and buyers. It’s a catalyst for a new mature market.”
The IRA empowers owners of clean energy assets to transfer certain tax credits to other taxpayers for cash, making financing and building clean energy projects easier and more bankable. Traditionally, the high costs associated with tax transfer made it challenging for owners of smaller-sized projects to make good use of the tax credit. However, now under the IRA, the ITC has been significantly increased from 6% to 30% or even 50% of the capital investment in qualifying projects. Sparkfund and Secured Carbon have each worked separately with the solar ITC, and are now using this deal as a roadmap for improving the economics of solar, storage and EV charging projects.
“Up until now, these projects couldn’t use their tax credits and were leaving money on the table,” said Tac Leung, CEO of Secured Carbon. “They were missing out on precious cash flow that could make or break their deployment. Combining our software with Sparkfund’s expertise in financing clean energy projects has created a standardized framework that enables all companies and qualified individuals to take advantage of the Inflation Reduction Act.”
“The new IRA ITC transferability mechanism changes everything. In the past, a very small number of market players were registering nearly all of the credits, which was bad for the market,” said Pier LaFarge, CEO of Sparkfund. “Sparkfund and Secured Carbon enabling a more diverse marketplace of smaller companies to register and sell credits is a game changer for both sellers and buyers of these credits. It establishes a new, more liquid and competitive market that will help achieve our nation’s energy infrastructure deployment goals, right when the grid needs it most.”
By unlocking additional cash flow for smaller projects, Sparkfund and Secured Carbon are expanding and diversifying access to the ITC’s benefits, accelerating the deployment of solar, EV charging and storage infrastructure. These transactions also open the door for further investment in projects in low- and middle-income communities where the assets can be most impactful.
News item from Sparkfund
