Marsh revolutionizes clean energy investment in the United States with a new tax insurance solution.
In a bold move to drive renewable energy growth in the United States, Marsh has announced the launch of its Tax Investment Default Insurance. This innovative solution aims to unlock more capital for investments in federal tax credits tied to clean energy projects in the country.
Under the Inflation Reduction Act of 2022, which introduced new tax incentives to promote renewable energy project development, developers now have the option to transfer future tax credits to investors without needing to take a direct stake in the project.
This transfer enables developers to generate liquidity to support early-stage project development, while buyers, typically financial institutions, benefit from future tax credits to offset their federal taxes.
However, until now, project lenders have imposed strict financial strength criteria on prospective tax credit investors, limiting access to high-quality capital and excluding many investors who do not meet these requirements.
Enter Marsh’s Tax Investment Default Insurance. This new solution aims to protect developers against the risk of default if a tax credit investor fails to honor their financial obligations once the credits are generated.
David Kinzel, Senior Vice President of Marsh for Structured Credit & Political Risk, emphasized the importance of this initiative: “The transferability of tax credits plays a crucial role in the development of the renewable energy market by offsetting the high upfront costs of constructing solar, wind, and other projects.”
“Marsh’s Tax Investment Default Insurance opens up new opportunities by allowing a wider range of investors to participate in the growth of this critical sector.”
This launch comes amidst a significant increase in the number of Marsh clients purchasing tax insurance policies to protect their investments in renewable energy tax credits against the risk of reduction or non-recognition of credits by tax authorities.
With this new solution, Marsh reaffirms its commitment to innovation in the financial sector and its dedication to supporting the transition to a cleaner and more sustainable economy.
Sources :
https://www.marsh.com/en/services/trade-credit/expertise/tax-investor-default-insurance.html