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Schneider Electric announced that it has committed to invest in a portfolio of Texas-based clean energy projects utilizing a Tax Credit Transfer Agreement (TCTA) for solar and battery storage systems developed, built, and operated by ENGIE North America (ENGIE).
The contracted projects are expected to come online throughout 2024 and will enable Schneider Electric to get closer to its 100% renewable energy goal in the U.S. and Canada.
The agreement between ENGIE, a player in the net-zero energy transition, and Schneider is among the first at this scale to take advantage of new tax credit transfer provisions in the Inflation Reduction Act (IRA) that will help companies meet their renewable energy goals.
The IRA's transferability clause enables the transfer of eligible federal tax credits from renewable energy, clean energy manufacturing, and battery storage projects, among other clean energy projects. This new feature creates a feasible alternative to traditional tax equity structures. Tax credit transfer also enables Schneider's Scope 2 decarbonization when the investor-buyer procures associated environmental attributes as part of the transaction.
This is not the first collaboration between Schneider Electric and ENGIE. Since 2017, the two companies have joined forces on multiple projects, and have led clients through their procurement of renewable energy via virtual power purchase agreements (VPPAs) that exceed 1.6GW in total in North America alone. ENGIE's investment and innovation in renewables have resulted in the company being named the leading developer of corporate energy PPAs in 2023 by BloombergNEF in its latest Market Outlook report and being ranked in the top three since 2019. ENGIE's total corporate PPA portfolio in North America exceeds 6.5GW.
Schneider Electric Tax Credit Investment Service
Schneider Electric was advised on the deal by consultants from its Sustainability Business, advisor on corporate renewable energy procurement. Schneider provides these consulting services on tax credit transfers to clients to help them take advantage of the innovative opportunities created by the IRA. It is estimated by Credit Suisse that nearly $1 trillion could be unlocked over the next ten years thanks to public and private spending mobilized by the IRA in climate and energy-related investments.