Three Reasons Why “Direct Pay” is Crucial for Clean Energy Tax Policy

Clean energy tax credits have historically been the primary mechanism through which the federal government has supported the deployment of clean energy. Clean energy developers usually do not have sufficient tax liability to use the tax credits themselves, hindering them from deploying next generation energy technology. The current workaround is for the developers to go to the tax equity markets, where they trade the tax credits for a lesser amount of cash up front. A better solution would be legislation allowing for a “direct pay” option from the federal government.