Currents Ep279: Cost of Capital: 2025 Outlook
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Jan 10, 2025 
In this discussion, guests Jack Cargas, Elizabeth Waters, Ralph Cho, and Rubiao Song—industry veterans in tax equity and project finance—delve into the burgeoning landscape of renewable energy financing. They reveal that tax capital for renewable projects is projected to soar to $33 billion by 2025. Key topics include navigating hybrid tax equity complexities, legal intricacies in project qualifications, and trends in solar financing shaped by tax incentives. They also explore the evolving lender dynamics in project finance amid changing market conditions.
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Record Tax Capital Raised
- 2024 marked the first time in over 20 years that tax capital raised for wind, solar, and battery projects exceeded $30 billion, reaching an estimated $33 billion.
- This signifies a substantial increase from $25 billion in 2023 and $18 billion in 2022.
Tax Equity Breakdown
- Of the $33 billion, traditional tax equity accounted for $11 billion, while hybrid tax equity reached $17 billion.
- Hybrid tax equity involves tax credit transfer features, with an estimated $10 billion sold to tax credit buyers, leaving a net of $7 billion.
Breakdown by Technology
- The $33 billion in wind, solar, and storage tax equity breaks down as follows: $6 billion for wind, $20 billion for solar, and $7 billion for battery storage.
- Growth was primarily driven by the solar and battery storage sectors.