IRA credits, energy demand continues to promote renewable investments

Brief of diving:

• The financial case of renewable energy projects is still strong, according to industry leaders and analysts, even when President Trump introduces uncertainty in the market with new rates, policies that prioritize the development of fossil fuels and his commitment to work with Congress to regain funding from the inflation reduction law.
• The Fiscal Credit for IRA investments, or ITC, “should survive virtually unscathed,” said Brad Molotsky, a partner at the Duane Morris law firm. In addition, the growth of the data center, together with the increasing construction and electrification of vehicles, will maintain the demand for high electricity, said Paul Decotis, a senior partner and head of East Coast Energy and Utilities in West Monroe.
• “In the light of this [demand]Politicians on both sides of the aisle agree that we need more power infrastructure and that 95% of the interconnection tail is currently clean energy, “said Alfred Johnson, CEO of Crux. “This is the fastest to deploy and, in many cases, the most affordable choice for the new power.”

Divide vision:

Earlier this month, Crux, a financial technology company that connects buyers and tax vendors, launched a debt capital market for clean energy developers and manufacturers to more easily access to funding.

Johnson said he has not yet seen investors or lenders withdrawn from the clean energy sector in response to recent uncertainty. “The leveling cost of energy from clean sources is as competitive or more competitive than others,” he said. “And therefore, companies make business decisions to solve the needs of more energy demand and the need for domestic components; they are making these decisions regardless of any opinion they may have, politically or otherwise.”

These decisions require capital, Johnson said, and “we are seeing more than flowing from what we have never seen before.” He said that Crux network lenders have already issued more than a billion dollars of deadline sheets.

A February report of the Grant Thornton consulting firm said that an expected “in the oil and gas industry … It has not been materialized and does not seem likely in the near future”, and reported that the merger and interest in acquiring the renewable sector had been “warm” even before the November election, but offered a strong global perspective.

“Because most regulations are completed by anger and specific technology credits have become neutral technology, we do not believe that the new administration will take measures to repeal the full credit profit group,” the report said. “However, there could be impacts on individual credits.”

If the anger is largely intact, its credits “will make renewables an attractive option for M&A, although demand has not accelerated as quickly as expected,” said Grant Thornton’s report. “The promotion and profitability of this subsector has dropped some predictions in recent years, but the production of energy from renewable sources is expected to increase in the coming years, with a long -term projected dramatic increase.”

Even without the Fund of the IRA, “many projects are alone and have good investment performance, regardless of whether or not the investment tax credit program can be used,” said Molotsky.

“Although this is likely to [the ITC] will be reduced or eliminated by wind out of the sea, [electric vehicle] Loaders and EVS, “he said,” the other programs that use ITC would be more within a previous energy strategy and should continue to be sure to trust and use advanced. “

Molotsky said that states like Texas have already deployed enough clean energy to create a significant momentum in the sector. He pointed out the deployment of the Wind, solar and storage of batteries of the electric reliability council of March 2, and the fact that on March 2, “wind, solar, storage and nuclear were fulfilled more than 75% of the Ercot demand”.

But some new funding will be “on waiting until the market has a clearer picture of which parts of the [IRA] The congress will be filmed again, “said Keith Martin, a member and co-head of projects at Norton Rose Fulbright.

“The market is financing projects that were already under construction this year,” said Martin. “A” safe bet “project is a project under construction in 2024. These projects have the right to claim tax credits under the 2024 Tax Code, provided they are fulfilled in four years.”

Decotis said that it is “less pessimistic than most people” about the destination of IRA’s fiscal credits thanks to the recent increase in US energy demand, especially electricity.

“Regardless of the policy change, the need for investment in infrastructure is maintained, much of which is expected through anger,” he said. “So I would expect some adjustments around the edges, and when Congress could raise money, maybe, but it does not predict that it has a significant impact on the investment dollars that will float the energy infrastructure. Because if it does, then we risk energy shortcomings, we risk shutdowns.”