Secure your future with Tax Insurance Partners

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 Tax Credit Insurance for renewable energy projects protects developers, tax equity investors, and lenders from financial loss if a federal tax credit—such as the Investment Tax Credit (ITC) or Production Tax Credit (PTC)—is disallowed or reduced by the IRS. These policies can also cover interest, penalties, and legal defense costs tied to a challenge of the project’s eligibility or claimed tax credit amount. 

 Tax Credit Insurance is a critical risk transfer tool used throughout the lifecycle of renewable energy projects, particularly in tax equity financings and project M&A. Common use cases include:

• Tax Equity Structuring: Provides certainty for tax equity investors on ITC/PTC qualification and eligibility, especially when construction timelines or ownership structures are complex.
   
• Transferability of Credits (Section 6418): Protects the buyer or seller of transferable credits from recapture or disallowance post-closing.
   
• Audit or IRS Challenge Risk: Mitigates uncertainty around whether the project satisfies prevailing wage, apprenticeship, domestic content, or energy community requirements.
  
• Creditworthy Counterparty Requirement: Replaces reliance on seller indemnities with an A-rated insurer to meet financing and investor requirements.

• Transaction Negotiations Stall: Buyers and sellers cannot agree on how to allocate identified tax risks.

Tax Credit Insurance enhances the bankability, marketability, and valuation of renewable energy assets by offering:

• Balance Sheet Capacity: Offloads guarantees and risk to investment grade insures allowing developers and investors to focus capital on the business. 

• IRS Risk Mitigation: Transfers the financial impact of an IRS challenge to an insurer.
   
• Investor Confidence: Unlocks capital by providing tax equity investors with downside protection.
   
• Post-Transfer Risk Protection: For Section 6418 credit buyers, provides recourse in case the transferred credit is later adjusted or denied.
   
• Faster Closings: Reduces or eliminates the need for tax credit-related indemnities and holdbacks.
   
• Clean Exits: Enables sellers to distribute proceeds at closing without ongoing exposure to tax credit risks.

Scope of Coverage
Covers disallowance or recapture of ITCs/PTCs, and may include interest, penalties, and defense costs—especially related to:

• Project placed-in-service date and eligibility
   
• Safe harbor compliance
   
• Prevailing wage & apprenticeship adherence
   
• Domestic content and energy community bonus credits
   
• Credit transfer risks under Section 6418
   

Policyholder
Can be held by:

• Project developer
   
• Tax equity investor
   
• Lender or credit purchaser (in transferable credit structures)
   

Policy Period
Generally matches the IRS audit window—up to 7 years or longer in some cases (e.g., for credit recapture scenarios).

Retention / Excess
Typically low or zero; the retention will be enacted to prevent recovery for a certain amount of defense costs.

Policy Limit
Matches the tax credit exposure at risk—commonly ranging from $20 million+ per project or portfolio.

Premium
Premiums range from 2% to 6% of the insured amount, depending on:

• Strength of legal/tax opinion
   
• IRS scrutiny level of credit type
   
• Technical complexity (e.g., domestic content, storage eligibility)
   
• Stage of project development or operation