Schneider Electric has committed $80 million to four ENGIE solar and battery projects in Texas. It is not buying the projects, lending to them or taking equity. It is buying their tax credits. What it gets back at the end of the arrangement is not cash. It is something else entirely.
Key takeaways
- Schneider Electric committed $80 million to a portfolio of ENGIE solar and battery storage projects in Texas through a Tax Credit Transfer Agreement, announced on 20 February 2024.
- Schneider Electric will use the tax savings from the ENGIE transaction to purchase 110,000 MWh of renewable energy credits from ENGIE projects over the coming decade, reducing its Scope 2 carbon emissions.
- The four ENGIE projects in Texas that Schneider Electric's $80 million partly funds were expected to come online throughout 2024.
- Schneider Electric was advised on the ENGIE tax credit deal by consultants from its own Sustainability Business, rather than an outside adviser.
- Enerdatics records 32 US tax credit transfer financings announced in 2023 and 2024, rising from 6 worth $1.76 billion in 2023 to 26 worth $3.33 billion in 2024.
What is a tax credit transfer, and why does it matter here?
A tax credit transfer is the outright sale of a project's federal tax credits to a third party for cash. The Inflation Reduction Act made this possible from 2023. Before that, a developer that could not use its own credits had to bring in a tax equity investor, usually a large bank, which bought into the project to absorb the credits and took a share of its cash flows in return.
A transfer is simpler. The buyer pays for the credits, typically at a discount to their face value, and uses them to reduce its own tax bill. It takes no ownership stake. That simplicity widened the pool of possible buyers from a handful of banks to any company with a large enough US tax liability.
Schneider is one of those companies. ENGIE gets $80 million of funding for projects it is building. Schneider gets credits it can set against its own tax.
Where do the renewable energy credits come in?
They are the second leg, and the reason Schneider did this rather than any other tax trade. According to Leap's record, Schneider will use the resulting tax savings to buy 110,000 MWh of renewable energy credits from ENGIE projects over the coming decade. A renewable energy credit, or REC, is a certificate representing one megawatt-hour of renewable generation. A company that buys and retires RECs can count that generation against the electricity it uses, which reduces its reported Scope 2 emissions.
So the money goes round in a loop. Schneider pays ENGIE for tax credits. Those credits lower Schneider's tax bill. Schneider spends part of the saving on certificates from ENGIE. The same counterparty sits on both sides.
That loop is why the $80 million should not be divided by the 110,000 MWh. The two figures describe different trades. One is the funding Schneider commits for tax credits. The other is the volume of certificates it will buy later from the saving. Leap does not record the price of the RECs, and the tax discount Schneider receives on the credits is not disclosed either.
Leap's record ties the arrangement to Schneider's target of 100 percent renewable energy in the US and Canada. It also describes the investment as a way to accelerate corporate renewable procurement through tax credit transfer structures. Read plainly, Schneider has turned a tax decision into a procurement decision.
Why is Schneider's role as buyer unusual?
Because most early credit buyers bought for the tax saving alone. Schneider bought for the tax saving and the certificates together. That gives it two reasons to do the deal and ties ENGIE into a decade of supply.
The structure also carries a different risk from an ordinary REC contract. A conventional corporate buyer signs a power purchase agreement or a REC contract and pays as it goes. Here Schneider commits $80 million up front against projects that, at announcement, were still due to come online during 2024. If those projects run late, the timing of the credits moves with them.
Leap notes one more detail. Schneider was advised by consultants from its own Sustainability Business, the part of the company that advises other corporates on energy procurement. It was, in effect, its own adviser on a structure it also sells as a service.
Enerdatics' data shows how quickly this market grew around the deal. Enerdatics records 32 US tax credit transfer financings announced in 2023 and 2024. There were 6 worth a combined $1.76 billion in 2023 and 26 worth $3.33 billion in 2024, an average of about $128 million per transaction in 2024. At $80 million, ENGIE's sale to Schneider sits below that average. The largest corporate buyers in the slice are in a different league: Fiserv agreed to buy up to $700 million of First Solar's manufacturing credits in December 2023, Visa bought First Solar credits recorded at $645 million and $225 million in December 2024, and Kimberly-Clark committed about $238 million to four Texas battery projects in September 2024.
What does the deal signal for US corporate clean energy buyers?
It signals that tax credit transfers are becoming a procurement tool, not only a tax tool. Schneider did not stop at one deal. Leap also records Schneider Electric Ventures buying Section 45X manufacturing credits from Silfab Solar in May 2024, with the amount undisclosed. A company that buys credits from both a project owner and a manufacturer is building a repeatable practice rather than making a one-off trade.
Other corporates were using transfers the same way across Texas. Tokyo Gas sold $118.5 million of credits from its Longbow battery to Foss & Company eight days before the ENGIE announcement, and First Solar's credit sale to Fiserv shows the discount a seller accepts for turning credits into cash quickly.
For developers, the lesson is that the buyer of the credits can also be the buyer of the output. Bundling the two gives a corporate a reason to pay for credits it might otherwise ignore, and gives a developer a single counterparty for funding and offtake. ENGIE and Schneider set that template early, and on a small scale.
Frequently asked questions
How much did Schneider Electric invest in ENGIE's Texas projects? $80 million, committed through a Tax Credit Transfer Agreement announced on 20 February 2024. The money partly funds four ENGIE solar and battery storage projects in Texas.
What does Schneider Electric get in return? Tax credits it can use against its own US tax liability. It will use the resulting savings to buy 110,000 MWh of renewable energy credits from ENGIE projects over the coming decade.
How large is the US tax credit transfer market? Enerdatics records 32 tax credit transfer financings in the US across 2023 and 2024, including 26 worth $3.33 billion announced in 2024.
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