Crux is expanding again.
Until earlier this year, the clean energy finance startup was a digital marketplace exclusively for buying and selling tax credits unlocked by the Inflation Reduction Act. But in March, as Republicans in Congress briefly threatened to eliminate tax credit transferability, the company moved into debt financing, a market Crux CEO Alfred Johnson told me later on is more than seven times bigger.
Now, in its quest to become a one-stop shop for efficient project financing, Crux has told Heatmap that it’s growing once more into the tax and preferred equity markets, two additional funding avenues for clean energy projects that could certainly stand to be organized, standardized, and digitized as they grow in importance. “The tax equity market was a $20 billion market before the IRA, and is now a $32 billion to $35 billion market,” Johnson told me, citing numbers from the company’s forthcoming mid-year market intelligence report. That’s a 10% to 20% increase over last year.
Johnson said that Crux’s platform will ameliorate some of the complexity and high costs that have historically made tax equity financing so difficult to access. In these deals, clean energy developers partner with tax equity investors, typically banks, which provide them with cash in exchange for an equity stake in their project — and the associated tax benefits.
In one way, it’s a funny move for Crux. Before the IRA passed, tax equity was essentially the only way for project developers with low tax burdens to monetize their credits, and transferability itself was billed as a solution to these kludgy deals. But even though the transferable tax credit marketplace has proven to be a valuable option for many developers, there are reasons why some still prefer tax equity financing.
For one, tax equity partnerships can actually be the cheapest form of project financing for large developers overall. That’s in large part because tax equity is such a scarce but critical form of capital that if a developer can secure it, they can often then raise other forms of funding, such as bridge loans, more easily. Tax equity deals also serve to establish the fair market value of a project, which thus ensures that project developers can maximize the value of their tax benefits.
Lastly, Johnson explained that tax equity financing allows project developers to capture the value of a tax benefit known as “accelerated depreciation,” in which a large percent of a project’s asset costs can be deducted in the first few years of operation as opposed to evenly over the project’s useful life. Unlike with tax credit transferability, there’s no direct way for developers to monetize accelerated depreciation benefits other than via tax equity partnerships.
These types of partnerships will, in all likelihood, still only make sense for well-capitalized projects deploying proven technologies such as solar, wind, and storage. More novel tech such as advanced nuclear, long-duration storage, or next-generation geothermal will probably continue to rely primarily on the tax credit transfer market. But as Johnson told me, “for the developers that have really strong financials, have large projects, are able to secure tax equity, that is often preferred as a way of monetizing their credits to selling directly in the transfer market.”
At the same time, the markets for tax equity and credits are increasingly converging. That’s because it’s become more common for tax equity investors — or the partnership itself — to sell the credits they now hold into the transfer market, Johnson told me. This provides the investor or partnership with immediate liquidity, which can then be invested into other projects. This type of hybrid structure has thus far made up over 60% of tax equity commitments in 2025, according to the company’s mid-year market report.
Crux is also expanding into preferred equity, a type of financing that allows project developers to raise additional capital closer to the start of commercial operations. Then, once operation commences, preferred equity investors typically receive fixed, priority returns before any distributions are made to common equity holders. This structure reduces risks for preferred investors, giving them a more predictable income stream. It’s a smaller market than tax equity financing, but still an important piece of the puzzle, Johnson said.
And then there’s — what else? — artificial intelligence.
As developers and investors that have used Crux’s tax credit marketplace “graduate” into new, often more complex forms of project financing such as tax and preferred equity, Johnson told me there are “huge opportunities” to make these deals more efficient. As he sees it, this will involve integrating the company’s current workflow management and documentation tools with AI language models designed to streamline document organization and synthesis, along with other administrative processes. The idea is to save time “without any deterioration in the quality of the underwriting,” Johnson said.
These latest expansionary moves will be far from Crux’s last, Johnson told me. There’s all sorts of equity financing Crux could theoretically help to facilitate, along with transactions between equipment manufacturers and project developers or project developers and utilities.
It’s all on the table, Johnson said. “I think we will continue to find that this mix of liquidity, efficiency, and intelligence makes sense in lots of different categories.”
