Navigating Credit Markets for Clean Energy: Structured Finance Tools for a Shifting Policy Landscape
In the post–One Big Beautiful Bill Act (OBBBA) era, the clean energy and infrastructure financing market has been marked by uncertainty and volatility. Mintz’s recent 2025 Annual Energy Transition Summit highlighted the impact of this bill and other major policy changes on the availability of capital and investments into the sector. Tailored structured finance and credit market strategies are essential to ensure that cutting-edge projects continue to thrive at this critical juncture in the energy transition.
Federal Support Rollbacks and Tax Credit Challenges
Rollbacks of federal support for clean energy are well underway. In addition to direct funding cuts, such as the termination of over $7.5 billion in Department of Energy (DOE) financial awards announced this past September, the OBBBA significantly narrowed the tax credit base for clean energy projects. After the bill’s passage, the Internal Revenue Service (IRS) issued parallel guidance that creates further challenges for borrowers seeking capital for wind and solar projects. To qualify for the production tax credit (PTC) and investment tax credit (ITC) under the updated requirements, these projects must begin construction by July 4, 2026 or be placed in service by December 31, 2027. The new guidance specifies that developers need to demonstrate substantial physical work or meet the 5% safe harbor for small facilities, while preliminary activities like permitting and financing no longer count as construction start. These requirements, coupled with continuous construction obligations and strict documentation standards, increase upfront capital needs for wind and solar facilities.
Increased Reliance on Structured Finance
With the sharp decline in federal funding for clean energy, structured finance, credit facilities, and institutional lending are now lifelines for companies in the industry. With limited non-dilutive funding available, many companies have turned to more dilutive options, such as convertible instruments (e.g., convertible notes and SAFEs) and preferred equity financings.
Common investor-friendly provisions that grew more prevalent throughout 2025 include:
- Higher discount rates and lower valuation caps
- Cramdowns and recapitalizations
- Reductions in valuation
- Warrant kickers
- Tranched (milestone-based) investments
- Reverse vesting of founders’ shares
Pre-NTP Funding and Lender Expectations
At the same time, lenders are scrutinizing clean energy and digital infrastructure projects more closely. Driven by the new eligibility requirements for wind and solar tax credits, pre-notice-to-proceed (pre-NTP) funding surged past $7 billion in the first half of 2025 as developers raced to secure capital for equipment purchases and meet tightened construction timelines. Given the inherent risk in this type of financing, deal structure is an increasingly critical differentiator for borrowers. In the first half of 2025, developers seeking pre-NTP capital that offered diversified portfolios and robust collateral packages, including revenue-generating assets and parent guarantees, were particularly attractive to lenders. Through these forms of strategic structuring, wind and solar projects can maintain their ITC and PTC eligibility in the face of policy changes.
Securitization and Syndication as Long‑Term Tools
Heightened regulatory complexity also means that securitization and syndication strategies are emerging as key enablers of long-term investment. Bespoke credit facilities offer tailored structures that align with unique project timelines and cash-flow profiles, ensuring flexibility in a context of shifting tax credit rules and foreign entity restrictions. These financing mechanisms help borrowers navigate policy uncertainty, secure competitive pricing, and maintain momentum toward energy transition goals.
Author
