Greenwood Sustainable Infrastructure (GSI) shares this analysis of the Inflation Reduction Act’s (IRA) effect on renewables from a project finance perspective, according to S&P Global Commodity Insights.

An uplift in project financings of renewable project financings is projected for 2023, supported by federal policy, with an increasing emphasis on environmental principles and energy security.

Financial and legal experts have reported that they expect $20 billion to $21 billion in tax equity financing for renewable projects in 2023, with the transition to a clean energy future accelerating. The climate bill, known as the Inflation Reduction Act (IRA), is viewed by many in the renewable energy ecosystem as the single most positive development in the history of renewable energy finance in the United States.

With supply chain constraints delaying construction on projects originally planned for 2022, the true impact of the IRA will take time to work its way into the market. However, the persistent demand for tax equity and sheer size of the incentive programs suggests significant long-term growth for renewables.

President Joe Biden signed the IRA in August 2022 and comprises $370 billion in energy climate spending, including tax incentives for solar, wind, hydrogen and energy storage projects. Approximately $270 billion of the new law is attached to various tax credits, but project developers and investors anticipate further details from the Internal Revenue Service on its implementation.

ESG is still hot, with lenders and investors continuing to seek environmental, social and governance, opportunities. Overall, there is very strong appetite for these kinds of deals from the lending community.


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