Tokyo Gas bought the Longbow battery in Texas in December 2023 and began building it straight away. About seven weeks later it had sold $118.5 million of the project's tax credits to Foss & Company. Set that number against what the project needed and the credit sale stops looking like a side transaction.
Key takeaways
- Tokyo Gas secured $118.5 million through the sale of Inflation Reduction Act investment tax credits from the Longbow battery storage project in Brazoria County, Texas, to Foss & Company, announced on 12 February 2024.
- Longbow is a standalone battery of 174 MW and 384 MWh according to Leap's financing record, sited to capture price volatility and arbitrage in the Houston region of the ERCOT market.
- Leap recorded a capital contribution of about $216 million for Longbow's project subsidiary when Tokyo Gas acquired the project from Clean Capital Partners in December 2023, so the $118.5 million credit sale equals about 55 percent of that figure.
- The Longbow sale marked Foss & Company's entry into transferability flip, or T-flip, transactions in the US tax credit market.
- Enerdatics records 11 US battery storage tax credit transfers announced between August 2023 and December 2025; Longbow's $118.5 million is the largest disclosed for a single named project and the first in that set to carry a disclosed amount.
What did Tokyo Gas actually sell to Foss & Company?
It sold the right to claim Longbow's investment tax credits. The Inflation Reduction Act allows the owner of a qualifying clean energy project to sell its federal tax credits for cash to an unrelated company that has tax to pay. Before that change, an owner without a large enough US tax bill of its own usually had to bring a tax equity investor into the project as a partner to use the credits.
The Japanese utility entered US renewables only in 2020, with the Aktina solar project in the same region. It does not need a large US tax bill to turn Longbow's credits into money. It needs a buyer with one, and Foss & Company was that buyer.
Leap's record describes the deal as Foss & Company's entry into the Transferability-flip space. A T-flip blends the older tax equity partnership flip with the newer ability to transfer credits. Marathon Capital acted as tax equity financing advisor to Tokyo Gas on the acquisition.
Why does the $118.5 million matter more than it first appears?
Because of what it is measured against. When Tokyo Gas acquired Longbow, Leap recorded a capital contribution of about $216 million for the project subsidiary. The same record notes that the project would use the US tax incentive programme, through which the actual investment in the project would decrease. The credit sale is the mechanism behind that sentence.
Divide one figure by the other and the credits come to about 55 percent of the capital contribution. This is not a comparison with a purchase price, because the acquisition record states that the deal value was not disclosed. It is a comparison with the money the project subsidiary needed. On Leap's figures, more than half of it comes back from a buyer of tax credits rather than from Tokyo Gas's own balance sheet.
Per unit of capacity, the credits work out at about $0.68 million per MW of power. Per unit of storage the answer depends on which record is used. The financing record gives 384 MWh, which puts the credits at about $0.31 million per MWh. The acquisition record gives 348 MWh, which lifts the figure to about $0.34 million per MWh. Either way, the battery holds roughly two hours of output at full power.
What kind of battery is Longbow, and why does that shape the deal?
Longbow is a standalone battery, meaning it is not paired with a solar or wind farm and earns money only by charging and discharging against the grid. The acquisition record describes it as a merchant project, which means it has no long-term contract fixing its revenue. Its business case rests on price swings in the ERCOT market around Houston: charging when power is cheap and selling when it is scarce.
Merchant revenue is hard to borrow against, because a lender cannot see a fixed income stream. Investment tax credits behave differently. Their value is set by the cost of the qualifying equipment, not by what the battery earns once it runs. That makes them one of the few parts of a merchant battery's value that can be pinned down before the first megawatt hour is traded.
The timing follows the same logic. Leap's acquisition record notes that construction started at the same time as the acquisition closed, with operations expected in summer 2024. The credit sale came in February, while the project was in construction, and the financing record states that the proceeds go to building and operating Longbow.
Enerdatics records 11 US battery storage tax credit transfers announced between August 2023 and December 2025, and eight of them disclose an amount. Longbow's $118.5 million is the second largest, behind the roughly $237.5 million of credits Kimberly-Clark bought across four battery facilities in the ERCOT market in September 2024. Among single named projects it is the largest. GridStor's sale of Hidden Lakes credits to Foss & Company in November 2025 raised $86 million, the Redbird battery raised $80 million in September 2024, and Ormat's Bottleneck battery about $47 million in November 2024. Longbow was also the first sale in the set to carry a disclosed figure. The one before it, Key Capture Energy's sale to Enhanced Capital in January 2024, did not disclose an amount.
What does the Longbow deal signal for US battery financing?
It shows how a foreign utility can fund a merchant battery early without a large US tax position of its own. The credits were sold while the project was still being built, and they covered more than half of the recorded capital contribution. For owners whose revenue is exposed to power prices, that is a way to fix part of the return before the asset runs.
It also shows how quickly the buyer side developed. Foss & Company used Longbow to enter the T-flip market in February 2024 and was buying battery credits again in Texas by late 2025. The same route has been used for generation: Vesper Energy relied on it for its Hornet Solar project in Texas. Texas batteries have since drawn conventional bank debt too, as in UBS Asset Management's Texas battery portfolio bought from SMT Energy. Enerdatics has also mapped the Texas battery projects positioned for tax credit transactions.
The open question is disclosure. Three of the 11 battery credit sales in Leap carry no amount at all. Longbow tells us the size of the credits, but Leap's record does not say what Foss & Company paid for each dollar of them.
Frequently asked questions
How much did Tokyo Gas raise from the Longbow tax credit sale?Tokyo Gas secured $118.5 million through the sale of investment tax credits from the Longbow battery to Foss & Company, announced on 12 February 2024.
Where is the Longbow battery and how big is it?Longbow is a standalone battery in Brazoria County, Texas, rated at 174 MW. Leap's financing record gives 384 MWh of storage and its acquisition record gives 348 MWh. It was expected to begin operating in summer 2024.
Who owned Longbow before Tokyo Gas?Clean Capital Partners. Tokyo Gas acquired the project through Tokyo Gas America in December 2023, and the deal value was not disclosed.
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