缅北视频

James Chenoweth, Alliant Mergers & Acquisitions, recently joined where he discussed how tax insurance for clean energy projects is transforming the renewable energy industry鈥檚 approach to risk management. The conversation highlighted how tax insurance not only mitigates risk for large-scale clean energy projects but also protects project timelines and achieves financial resilience.

In this article, we discuss the key takeaways from the discussion, including critical risks facing clean energy projects, how the energy insurance marketplace works and the value of a strategic risk management plan in today鈥檚 complex risk landscape.

What is Tax Insurance for Clean Energy Projects, and Why is it Important?

Tax insurance allows developers and investors of clean energy projects to transfer the risk of IRS tax credit challenges to insurers. For example, the potential for the IRS to audit or dispute certain tax benefits like the Investment Tax Credit (ITC) or Production Tax Credit (PTC), can result in significant financial and operational impacts that may stall or stop the clean energy project from moving forward altogether.

By transferring that risk, investors and developers can move forward with project financing with greater confidence, knowing their tax position is protected and there is a reduced risk of future financial loss. This is beneficial for investors who are considering financing:

• Tax credit projects
• Projects with significant bonus depreciation
• Large-scale projects with cost segregation
• M&A transactions with material pre-existing target or structuring tax issues

With tax insurance in place, financing partners have a financial safety net if tax credits or other attributes are challenged.

Growth in the Renewable Energy Sector and Insurable Tax Risks

As clean energy becomes a focal point for many businesses, demand is rising in the following areas:

• Hydrogen
• Carbon capture
• Nuclear
• Renewable fuels, such as sustainable aviation fuel (SAF)
• Batteries

To meet this demand, stakeholders should consider tax insurance early to protect investment opportunities and keep timelines moving forward. Insurability is 鈥渂ased on what the tax lawyers, outside counsel or outside accounting firm concludes probably wins at court. They will look at the pros and cons of the position and think about whether a judge would agree with the taxpayer or not. If they say yes, they agree that it probably would win, then it's generally insurable,鈥� said James Chenoweth.

The following risks to clean energy projects can be covered to ensure project timelines and budgets stay on track:聽

• The amount of the credit
• The qualification for the credit
• The recapture for the credit (e.g., if a risk occurs after a tax credit is previously claimed, such as carbon capture in a leak)
• Structuring of the legal entities above the project company (i.e., top-down issues that can introduce credit challenges)

Regulatory and supply chain issues, introduced by legislation like the One Big Beautiful Bill Act and changes in Foreign Entity of Concern (FEOC) guidance, can also pose a threat to clean energy projects. Project stakeholders should work closely with tax specialists to examine their supply chain and determine whether their project is creditable.

Main Risk Categories Impacting Deals in the Renewables and Battery Space

The primary risks derailing clean energy project deals today are often non-tax in nature, with timing and stakeholder alignment emerging as the most critical factors to control.

Projects must navigate complex permitting processes and secure alignment across a wide range of stakeholders, including:

• Regulators
• Local communities
• Developers and investors
• Landowners
• Environmental groups

The primary challenge lies in coordinating all parties to reach an agreement; failure to do so can lead to costly delays or project abandonment altogether.

To mitigate disagreement and streamline project timelines, 鈥淵ou have to get the right team of lawyers, investment advisors, insurance advisors and your commercial business development team talking to each other, not stepping over each other, and collaborating as early as possible,鈥� said James Chenoweth. This seamless cross-collaboration across parties will help align stakeholders around common goals and set up projects for success.

Understanding the Insurance Marketplace for Clean Energy Projects

When a project鈥檚 stakeholder might benefit from tax insurance, brokers initiate a competitive process in which multiple insurers are invited to submit bids. This creates an auction-like environment, encouraging carriers to offer their most competitive terms and pricing, with the goal of achieving the best overall value for the client.

When developing a clean energy project, it鈥檚 recommended to involve an insurance broker in the process early. A broker can help to identify and mitigate tax risks before they become obstacles to closing, as well as assess insurability of tax positions and shape the deal to align with project requirements.

As the leading specialty broker, Alliant leverages decades of industry experience and a robust network of A-rated insurers to secure coverage for large-scale clean energy projects, including:

• LNG
• Carbon capture
• Hydrogen
• Renewable energy and fuels

For more information on how Alliant can support deal dynamics for your next clean energy project, reach out to our specialists today.

Listen to the full podcast episode or review the transcript .