Tax equity financing software models how a clean-energy project in the United States is paid for, including investors who pay part of the cost in return for its tax credits. It is sold mainly in the United States, because the credits exist under US federal tax law. A tax credit is an amount that a taxpayer may subtract from the tax it owes. In the United States, clean-energy projects, such as solar, wind and battery plants, earn tax credits. A 2025 law ends these credits for new solar and wind plants. Such a plant now qualifies only if its construction began by 4 July 2026, or if it starts operating by the end of 2027.
Often the developer who builds a plant has no large tax bill, so it cannot use the credits. An investor, usually a bank, can. In tax equity financing, the investor pays part of the project's cost. In return, it receives the tax credits and a share of the cash. In the early years the investor's share of the cash is large. After the investor has earned its agreed return, the share falls to a small figure, and the developer usually buys the investor's share back.
The software works out the cash that each side receives each year, and what return each side earns. Imagine a solar plant that costs $100 million. A bank pays $35 million and receives tax credits of $30 million, plus a share of the cash. The developer changes the share, the price of power and the buy-back year, and the software shows each side's return. Developers, banks and accounting firms use it, because a small change in the share can move millions of dollars between the two sides.
India has no market like this. Indian solar and wind developers pay for their plants mainly with bank loans and their own money, and a tax credit that an outside investor can buy does not exist there.
The price of power comes from power market modelling and from energy market research. The model is a financial one, close to what energy trading and risk management does for trades. Contracts that fix a price in advance are called derivatives. A project's income can also be tied to licences and royalties.