Key takeaways from Crux’s inaugural clean energy lender briefing

This event is off the record to any members of the media. The recording and slides of this presentation will be sent to everyone who's registered, for this event after the event concludes, so you will have access to those. If you have any questions, please feel free to drop them in the Q and A window, and we'll do our best to address all of them over the course of the presentation today. With that, we'll start introductions. I can quickly introduce myself. My name is Amy Yoon. I am part of Crux's Stock Capital Markets investor coverage team here at Crux. So I've actually met many of you already who registered for the webinar. And I'm very excited to share what we've been able to observe in the market for the first half of the year what we anticipate for the remainder of twenty twenty five and beyond. I will now hand it over to Katie Bays and Charlotte Caldwell, our marketing and business team for their introductions. Great. Charlotte, why don't you go first and then I'll jump in and start the presentation. Sounds good. Hi, everyone. I'm Charlotte Caldwell. I'm an analyst on the market intelligence team with Katie. I started at Crux about six months ago and very excited to hopefully share some helpful takeaways from our market intelligence report. Great. And I'm Katie Bays. I lead Crux's market intelligence practice, and I've been with the company since twenty twenty three. Let's get into the data. So I wanted to start with kind of a snapshot of where Crux's data comes from. This is such a common question that we get from lenders and from everybody. What is our data representative of? Crux has been surveying the tax credit market and the tax equity markets over the course of the last two and a half years. We have a database that sits at currently forty billion dollars of completed tax credit transactions, and it covers essentially every major tax credit category, more than a dozen different technology types. And this is where so much of our data is rooted. We, of course, we do have a marketplace on Crux. We have done more than one hundred and twenty transactions since our company began to operate, but the data that we have from our own activity is heavily supplemented by the data that we get from market participants such as yourselves. So we do consider the database to be relatively market representative. And for folks who have come to utilize and rely on this data, hopefully, you have found it to be so and that it's been helpful to your process. Let's get into our mid year market intelligence report and some of the core takeaways from that. You'll find a quick outline of our discussion topics on the screen here. We're going to start by touching on policy. Policy has, of course, been extremely dynamic in twenty twenty five and continues to be. We'll talk through the latest state of play with respect to key policy issues. We'll share some takeaways from the tax credit market in the first half of twenty twenty five and some of the key drivers of growth that we've observed in that market. Then we'll talk through pricing. Pricing is one of the most significant commercial terms in a tax credit transaction. It's one of the factors that we watch really closely, and so we will share general pricing dynamics, trends, and rules that we've observed. I'll then hand it back to Charlotte to talk about the tax credit insurance market. She's recently published a paper unpacking the nature of tax credit insurance at present, and we'll cover some of the core findings from that research. Then finally, we'll talk a little bit about what we've seen in the second half of this year so far and take questions at the end. With that, I want to encourage everybody to use, if you have questions, use WSIA's Q and A feature. There's a question mark inside of a talking bubble, and so you can submit questions there. As we receive them, we will certainly answer them, try to leave some time at the end to make sure that we can do that. Without further ado, let's jump into the policy. I think just as a table setting comment, as everyone is largely aware, this summer, the One Big Beautiful Bill Act passed Congress. It enacted a variety of changes. Maybe just as important were the things that the bill did not change. So while the bill did restrict the use of tax credits for wind and solar facilities that either begin construction after July fourth of next year or enter service after twenty twenty seven. It retained tax credits for most other technologies, and importantly transferability was retained for all different varieties of tax credits to which it had previously applied. Then there was one small tax credit category which was actually added to the transferability category. So generally speaking, even though there are these new restrictions placed wind and solar, the industry was largely, I think, untouched in the short term by some of the policy changes that were enacted in the context of the tax bill. There were some important changes to how the tax credits will be accessible in the future related to the foreign entity of concern rules, and we'll talk about that in greater depth. Importantly, we get to keep a lot of the familiar aspects of the core ITC and PTC tax code, the safe harbor function, the use of start construction to establish the right to safe harbor credits. In many ways, the tax regime has continued to exist largely similar format after the one big beautiful bill. But let's talk about kind of the core difference that I think a lot of folks in the market are processing, which is Fiat. So foreign entity of concern, set of rules that had previously applied to electric vehicles, which have been expanded now to apply to a variety of other tax credits, significantly the Section 48EITC and the Section 45Y PTC, as well as Section 45X advanced manufacturing PTCs amongst others, but those kind of being the most significantly affected. The implementation of the FIOQ rules really begins next year. There are different pillars of FIOC, which we'll talk through, but the implementation dates for those different pillars are non uniform. There are some considerations around when which provisions begin to kick in. We'll talk through that. Let's actually skip to the next slide and we can just kind of jump into it. So of the three pillars, the first pillar that we're going to discuss here is effective control. So the effective control provision intends to look at whether or not there are contracts that a company has entered, which are subject to fiat, which means that they're either entered after July fourth of twenty twenty five, or they have payments that persist after July fourth of twenty twenty five. Those contracts will be reviewed and evaluated from the point of view of whether or not those contracts confer effective control onto a prohibited foreign entity or a specified foreign entity. So that's the specified foreign entity could be a Chinese company owned by the Chinese government, but it could also be a Chinese individual, national company domiciled in China. So it's a bit more of a wide ranging definition. And the question here is in terms of which provisions effectively confer control onto those entities. Crux, Charlotte and I specifically have undertaken a process with a group of about five dozen manufacturers and companies that are building projects to evaluate their state of readiness with respect to implementing fiat. This is a core issue that companies are well down the path of trying to review their contracts and determine whether there are effective control clauses in there and then renegotiate those contracts to remove those clauses. But there's a lot of uncertainty. I think as folks will know, the Treasury has not issued any guidance related to the implementation of FIOQ yet, so which provisions in contracts and which contracts one must review is kind of an unknown question at this time, so that creates a certain amount of uncertainty and risk in the short term. Not a whole lot of time to figure this out. The phase in dates or the dates in which this provision applies are pretty much across the board, twenty twenty six for all parties. Even those projects that began construction in twenty twenty five or twenty four, it's more specifically twenty twenty five, projects that began construction this year but enter service next year will still be subject to the effective control provisions. Let's go to the next. Ownership is another critical test. There's two categories of ownership that the ownership rules look at: they look at the specified foreign entity, which is sort of a broad category, and then they also look at foreign influence entities or entities that are significantly owned by specified foreign entities. So, again, many companies have undertaken processes to try to evaluate whether or not their ownership flags against these ownership rules, but these rules as well kick in starting next year. So again, projects and tax credits that are generated within calendar year twenty twenty six, if they are among the categories that are listed on the screen here, the tech neutral ITC and PTC, 45X, Q, U, and Z, any of those tax credits will need to satisfy ownership rules in order to be qualified to generate tax credits. Let's go to the next. And then this is the supply chain. So material assistance is the third pillar of Fiat. I think this is actually one of the pillars that is best understood by folks in the market and and folks generally regard as one of the more, if not manageable or navigable, because all of Fiat is pretty complicated, at least one of the areas where you've got the clear sort of roadmap of what you are looking at. But in a general sense, companies need to satisfy that no more than a specified percentage of the costs incurred in the construction of that facility were incurred to certain foreign entities, specified foreign entities. The test here is a cost base. Companies have the option of using the domestic content safe harbor tables as a proxy for overall facility cost apportionment. And that that is, I think, as we understand, is generally what many companies are doing. The applicability of these rules is also a little bit delayed relative to the last two. Material assistance does not apply to facilities that began construction in twenty twenty five. It will apply to users of the 45Y, 48E tax credits that begin construction in twenty twenty six or later. It also applies to any 45X eligible tax credits that are generated beginning in twenty twenty six. There's a bit of a staggered implementation timeline for material assistance, but that broadly speaking is the three main pillars of FIOC. I know that we started our presentation with the most complicated thing, but I wanted to make sure we got this information out there. If folks have questions, feel free to ask them. Let's move on to the safe harbor quickly and then we can kind of dive into our market commentary. Wanted to just touch on again very quickly the safe harbor dates that have been somewhat updated in the aftermath of the one big beautiful bill. IRS's folks will be aware did release new safe harbor rules. Any facility that began construction prior to September second of this year can apply the legacy safe harbor regime. That means using the five percent cost test or the physical work test. Any facility that began construction September second or later has to comply with the new set of rules, which are substantially similar, but restrict the use of the five percent safe harbor to facilities that are smaller than one point five megawatts. We wanted to plot out kind of what the hypothetical combined beginning of construction, continuous construction, safe harbor windows accommodate, and it is essentially this that facilities have to begin construction, presuming they begin construction after that September second date, begin construction by July fourth of twenty twenty six, and then have to enter service essentially by either the end of December twenty twenty nine or the end of December two thousand thirty, subject to when they began construction to earn the tax credits that they have safe harbored into. There are caveats to that. The continuous construction test is not absolute. Companies can present that they've made continuous effort outside of that four year window of time, but the most straightforward application of the continuous construction test is the four year continuity safe harbor. That's what this figure is intended to represent. Then we'll go to the next slide very quickly, Charlotte. Just as a synthesis, this sort of outlines all of the rules related to the beginning of construction requirements. For anyone who needs that refresher, this slide is here. It's a bit of a desk reference, and as Amy said, we will distribute this material to everybody on the line as well. Let's go on to the next, Charlotte. I'll hand it over to you to run through some of our initial findings. Thanks, Katie. Okay. So the next section is kind of synthesizing, a bunch of different takeaways from the market, but the overall takeaway is that we saw significant growth in the first half of this year. So Crux's market data shows that the total value of tax credit sales exceeded twenty billion dollars in the first half of this year. So this this figure here in the light blue, you have first half of twenty twenty four, dark blue is first half of twenty twenty five. The first two columns are showing previous year vintages transacting in the current year. So that would be twenty twenty three vintages transacting in twenty twenty four. Twenty twenty four is transacting in twenty twenty five. And those have risen up to five point seven billion dollars in the first half of this year from two point five billion dollars last year, which is a significant growth. And then we also saw a significant growth in the current year category as well. So that's the next two columns. Those rose to twelve point three billion dollars from nine billion dollars And again, this growth is happening in spite of policy. So there was so much underlying momentum in the market that it was able to continue growing despite the policy uncertainty that characterized the first half of this year that Katie kind of covered in the last section. And, again, that's just due to a high number of historic investment decisions that have supported the continued growth in tax credit supply that we've seen over the past few years. And we also are seeing a bit of growth on the forward side as well. So that's the four columns on the right. So some buyers are taking positions on credits that will be generated in twenty twenty six and beyond, but you can see the overall volume is not nearly as high as the other two categories, and the increase year over year isn't as dramatic. And then this slide kind of zooms out a little bit. We have data from the Clean Investment Monitor showing total investment in energy and manufacturing, and that's stabilized at about thirty five billion dollars a quarter, which is elevated relative to the period before twenty twenty three. So as there's been lots of headwinds and public project cancellations in the market, this is just showing that there's still a large amount of capital deployment and strong market fundamentals. And one of the areas of growth that we've seen is in transfers out of tax equity structures specifically. So in general, for all tax equity commitments in twenty twenty five, we're estimating an increase to thirty two to thirty five billion dollars from twenty nine billion dollars last year. And, again, a big source of that growth is those transfers out of tax equity structures. So that's represented by the yellow on this figure, and we're expecting those to almost double from seven billion dollars to eleven to thirteen billion dollars this year. And then this figure here shows kind of a different cut of the same, you know, breaking down by financing structure across different technology types. And there's some interesting patterns that you can see. So utility scale solar has the highest access to TE at about seventy two percent. A lot of that is due to the track record of the developers that are developing these utility scale solar projects. And then smaller, more distributed technologies like CNI or community solar rely on TE much less often at only about twenty percent. And that's due to a combination of potentially some of these developers not having the same track record as utility scale, but also a lot of these projects are merchant or partially merchant. And typically, TE investors prefer fully contracted projects. So this is showing that for certain tech types, tax equity is limited, but transferability has introduced these creative capital solutions that are allowing these companies that historically couldn't access tax equity to utilize the benefits of working with an investor to achieve a step up and monetize their tax credits more efficiently. So in other words, the reason the financing structure matters is because structures that involve bringing on an investor allow an ITC entity to achieve a step up, whereas in a direct transfer, they're calculating that, off of the cost segregation report. So they're just able to monetize their tax credits more efficiently and calculate their step up based off fair market value rather than the cost seg report. And then another takeaway that we have seen is that storage and solar plus storage grew rapidly in in the beginning of this year. So they went from a combined nine percent in the beginning of twenty twenty four to twenty six percent of the market share in the beginning of twenty twenty five. And there's a couple of different factors that are playing into that. So we've seen technology improvements and cost improvements for batteries, which just makes it easier to incorporate them into facilities. But we've also seen increased demand for reliable and dispatchable energy, especially from data centers. On the flip side, we saw tax credits from wind facilities decline pretty substantially. So those went from thirty three percent to nine point five percent. And that's just exemplifying that the benefits of the market aren't seen equally across different participants, whether that be different technology types or investment grade sellers versus non investment grade sellers, which we'll talk about in a second when when Katie goes over pricing. And then finally, we're just seeing that the market is diversifying. So not only did we see storage and solar plus storage increase, but nuclear and advanced manufacturing are also up year over year. So those went from, combined less than twenty percent of the market to more than fifty percent of the market. And that's just one of the things that we we do expect this to continue and continue to see more diversified technology types enter the market. Right. And with that, I will pass it to Katie to cover pricing. Great. Thank you, Charlotte. All right. The broad takeaway here is that we have historically observed relatively strong pricing in the tax credit market. Let's go to the next slide. The trajectory in general for twenty twenty five has been sort of a downward trajectory on price. It's not a uniform experience across the market. One of the things that we've endeavored to do in this, the portion of the analysis here is to really bifurcate between the investment grade and non investment grade sponsors. Just to spend a second talking about who that is. Investment grade sponsor in our definition is really anybody who can convey an investment grade indemnity, and so that'll typically be a utility company, but it will also include situations where we know, there's a tax equity partner who is conveying a bank level indemnity along with a credit, even though the underlying sponsor in that deal is not themselves. Investment grade, those guys are generally observing and experiencing a slightly different market than everybody else. What we have on the screen here is a sort of very broad strokes average pricing for investment tax credits based upon those two designations. Historically, we've seen ITC's transact at ninety two point five cents. That's been a pretty persistent annual average between twenty twenty three, twenty twenty four. But then getting into twenty twenty five, what we found was that the market really bifurcated. There's always been a moderate premium for an IG seller, maybe a penny, but that percentage of that premium has really blown out to more like a three cent increase over the non IGE seller. So for our investment grade group, we generally saw pricing in the neighborhood of around ninety four cents, very strong. As far as ITC pricing goes, That would be sort of the, I would say the seventy fifth percentile of the market, sort of the top end of the ITC pricing. Then we have our of our everybody else, the non investment grade category. And for those sponsors, we actually observed a pretty significant decrease in pricing, around ninety one cents on average across all deal sizes, technology. So just again, at the ITC category as a whole. The divergence on the PTC side was observable, but not as significant. So we'll get into that a little bit more here in a sec. But this is, I think, generally, I think important table setting context in terms of what kinds of pricing we've observed in twenty twenty five. And just to get into the why, there are a couple of factors. One is obviously the policy uncertainty that hung over the market in the first half. There was a lot of back and forth between tax credit buyers and sellers over the indemnity package, the nature of the indemnity, particularly in the context of changes in law, retroactive changes in law. The sellers that could essentially respond to that uncertainty by providing an investment grade indemnity that, you know, the buyer will be made whole if there is a retroactive change in law, which fortunately there was not, but it was certainly a worry for parts of twenty twenty five. Think those folks experienced a more liquid dynamic market. People that could not offer that or had to kind of adjudicate that issue in the context of tax credit insurance, I think generally saw less liquidity. And so As we've gone into twenty twenty five or the second half of the year, we'll talk about this more, this dynamic has continued to hold and maybe become even a little bit more exaggerated. Let's go to the next. It's a very busy slide. I know it's probably harder to read on the screen, but for folks who will receive the deck, can go back and reference. This is very detailed data. What we have here is the distribution of average prices across the three major solar type categories based upon deal size. There's a couple of things here to note. One is that we do generally observe a positive correlation between deal size and price. Larger deals achieve certain economies of scale, generally transact at higher prices for buyers who want to transact in that, you know, several hundred million to, you know, maybe a billion dollar tax credit category, the quantum of savings that they can achieve, even at relatively high, you know, ninety four, ninety six level pricing is still pretty large. So the juice is well worth the squeeze. Smaller deals have a variety of other impediments. So when you get to the other end of the market deals under ten million dollars Charlotte will unpack that in greater detail in the context of insurance, but that's where you tend to see the lowest pricing in the market. That deal size relationship continues to hold as we have historically observed. The other things that we noticed are, of course, we have historically utility scale solar deals tended to transact at higher prices, investment grade utility scale sponsors got particularly high prices and price was very convergent. Really across all deal sizes, you're generally seeing pretty consistent pricing between say like ninety three and ninety six cents. For those non IG sponsors, pricing's a little bit lower, but still relatively high in the context of all of the other solar categories. We get into distributed solar. That's where we've actually seen some year over year movement in terms of where pricing kind of has softened and where it hasn't. C and I solar last year was the lowest priced segment of the solar market. We did not see that this year. We actually saw that resi solar dropped below C and I on average pricing for most categories. So we generally have seen, you know, relatively low pricing across all the distributed categories, but that resi was the lowest, followed by C and I being then a little bit higher. A lot of variation across deal sizes for both of those types, but we, you know, again, kind of have seen that those two categories price below utility scale and generally transact with a little less liquidity. Let's go to the next. So one of our other kind of major tech types, the wind production tax credits, this really forms a good example of the higher priced part of the market. Wind PTCs are generally pretty liquid, transact in a pretty liquid market. As Charlotte noted, we've seen a bit of a decline in terms of the overall market concentration of wind PTCs. We're seeing more of them transact on a long term strip basis, not on a spot basis. The general kind of trajectory of pricing is what you see on the screen here. There is a bit of a gulf between the non investment grade and investment grade win PTC sellers, but I think this is representative of really a category of the market where you do have a lot of investment grade participants, and the non IG group is a little bit thinner. We don't actually have as much data for that group here. Let's go to the next. Then the advanced manufacturing PTCs, just to kind of go to the other side of the market, we've got these two really established categories, solar and wind, and then we've got the sort of new category, which is the advanced manufacturing section 45X PTC. Wanted to show what we're seeing in terms of average pricing there as well. 45X PTCs have transacted at pretty high prices. We've seen some recent weakness in that, so in the third and the fourth quarter of this year, I would say the average prices declined somewhat relative to what you see on the screen, But as a general matter, we do tend to see 45X transact at relatively high prices. Charlotte will cover, I think, little bit more on what the prevalence of insurance is for this group. But we do see, we'll typically not see insurance very frequently on most PTC deals. We do see insurance on 45X deals more often. I think with that, maybe we want to take a moment and answer a couple of questions. Amy, I do see a few. Yeah, thank you, Katie. It looks like we've shared a lot of data across technologies and even how 45X compares to some of the mature solar tax credits. Is there any data that we can share on the pricing gap for perhaps 45Q or 45V in comparison to solar tax credits? Yeah. So I think that what we are seeing, we haven't seen a ton of 45Y. We have seen a couple of deals, but it's not been a super abundant part of the market. I would say that what we typically see is in terms of the newer 45Q is not new, but in terms of some of the newer PTC technologies, it is not uncommon that you will see pricing in the 80s, let's say maybe the higher 80s for a lot of those tax credits. Then what we have seen, I think 45Q, it's been just a little bit higher, probably closer to ninety or ninety two cents gross. Although I should say all the prices that we are sharing are gross prices paid by the buyer. There are transaction costs, are typically paid by the seller that reduce net pricing to the seller, but that would, I think generally be where we have seen those credits transact. They're not at the level of like a wind PTC or even 45X, but they are relatively strong pricing. There's good indication of market demand, I would say for all of the fuels production tax credits, particularly 45Q, very in demand, 45Z, the new clean fuels PTC has also been very in demand. There are unique insurance considerations for both, but there is a market for both of those credits and pricing I think has generally been relatively strong, if not at the level of a wind PTC. Does that make sense? Yeah, super helpful. As we cover pricing data, I think the next part of the data looks at how market participants are really allocating risk through insurance. For those of you who want to learn more, we actually just published our first insurance white pig bearer, which has been reviewed by all major insurance companies. And this is downloadable on our website, cruxclimate dot com, for further details. So with that, I'll hand it over to Charlotte, who will be covering our data on insurance. Awesome. Thanks, Amy. Okay. So in general, from, like, the widest view, there wasn't a huge change year over year in the percent of ITCs and PTCs obtaining insurance. So sixty to seventy percent of ITC deals have insurance, where twenty two to twenty three percent of PTCs have insurance. And again, ITCs have more inherent risks. So that's why they're just insured at a higher percentage, a high percent of the time. But in general, it's a very dynamic market that is tightening. So we've seen a lot of the input costs into insurance increase. So minimum fees are rising. Underwriting fees are rising. Those have gone from fifty to ninety thousand dollars to closer to a hundred thousand dollars or more. And then we've also heard that portfolios are often even more expensive because they can be seen as more complicated to underwrite and insure. And as Amy mentioned, we we get into a decent amount more detail on that in our insurance guide, so definitely take a look at that if you're interested. And we have heard that the higher cost of insurance is at least partially driven by some claims that have been made against transferable tax credit policies issued in the last couple of years. So, again, just lending to that tightening market. And so this slide is looking at the premium that we're seeing either for investment grade sellers or sellers that obtain insurance. So there are two different types of indemnities that we see in deals, either the seller's investment grade or they're obtaining insurance. In other words, companies transacting with without insurance are investment grade. If you are an investment grade and you're getting insurance, you're and sorry. If you are an investment grade, you're getting insurance and or you're transacting at a lower price. So the premium is pretty similar for these two. You can see it's right at about three cents, but that's not to say that your baseline price will be the same for, if you're an investment grade seller or if you're obtaining insurance. So on average, you'll transact at a higher price, about three cents, but it's not necessarily going to be the same price as an investment grade seller would see. So in short, insurance is worth it. You're still being compensated. There is a benefit, a quantitative benefit for this, but there's also a qualitative benefit as well. You're gonna see increased liquidity. There's just not a whole lot of risk appetite on the buyer side, so they're really looking for ways to kind of shift that risk and indemnify these deals. And the next few slides, I'll go through relatively quickly, but they're just kind of showing the percentage of insurance coverage across deal size, and then we'll also look at tech tech type quickly as well. So Katie mentioned earlier, typically smaller deals are not not as likely to be insured. So about twenty percent of deals under ten million dollars obtain insurance in our dataset. Usually, insurance is just too expensive as a share of the overall deal. And then that percentage jumped significantly in the ten to twenty million dollar deal size range. It declines a little bit after that. Just a lot of those larger deals tend to be more likely to be coming from investment grade sellers. But in general, insurance is most common in deals from ten to a hundred and fifty million dollars. And then for tech type, I think looking at solar specifically does a good job of kind of highlighting some of the trends. So looking at utility scale solar, about twenty five percent of these deals have insurance, and that's almost a one to one breakdown of the non investment grade sellers versus the investment grade sellers. So that's just reiterating my earlier point that if you're investment grade, you're not obtaining insurance. If you're non investment grade, you're much more likely to obtain insurance. And then on the flip side, we see resi solar is insured over ninety percent of the time. Most I think virtually all of the listings in our dataset were coming from non investment grade sellers. So the ratio is kinda flipped there, and we're seeing most of these deals obtain insurance. And it's also interesting to look at this as a time series. So this is showing advanced manufacturing, the percentage of deals obtaining insurance over time. So you can see that's fallen from eighty percent and somewhat stabilized around forty percent. And that's just showing that buyers are becoming more comfortable with this tax credit and requiring insurance less less than they were historically. And then here we have some data on the coverage levels. So coverage typically ranges from a hundred to a hundred and forty percent of the nominal value of the credits to account for all of the losses. Solar, with the exception of resi solar, so that first dot there showing the average coverage in blue and then the range, that is one of the more standardized, averaging just slightly over one hundred percent. Whereas residential solar, can see as a much wider range. And that's because of the portfolio approach here. Partial insurance is more common just because there's not gonna be one weather related event that would take out the entire portfolio. So not as necessary to have a high insurance coverage. And then we see a a pretty wide range as well for storage, and that's because of the kind of different deal structures that we see there that can vary significantly between fully merchant all the way up to fully contracted. And then finally, biogas averaged the highest at about a hundred and thirty five percent, and that's just reflecting the risk appetite of buyers for these tax credits. Great. Thanks, Charlotte. It seems like our data indicates that that's the case, but we've had lenders who indicated that insurance costs rose up to two fifty bps recently, which is significantly affecting their deal economics. Would you say that there are still material benefits to getting insurance then? Yes. I think you're still seeing an average three cent higher bid. It's pretty clear in the data that it is still worth it. And there's just not the buyer appetite for non investment grade uninsured deals. So that's still driving the need for sellers to obtain insurance. Okay. And then secondly, I know we've talked about Fiat and some regulatory changes that we experienced this year. Is change in law or Fiat going to be part of this growing list of exclusions or, you know, is insurance taking on Fiat risk? As of right now, we're not seeing insurers take on fee up risk. I think after there's more guidance, we may see that start to be more of the case. But yeah, we haven't seen that materialize yet. Great. Now let's talk about outlook. We just published our third quarter report and we'll be sharing our twenty twenty five annual report on February twenty fourth of next year. But let's talk about the outlook and how these trends combined with policy shifts are shaping market conditions for the rest of the year and beyond. Katie? Yeah, sounds good. All right, well, we'll get into kind of our first big takeaway here is that, you know, a lot of energy and time was spent, I think, following the one big beautiful bill from the point of view of, you know, what was it going to mean for tax credits? I think in the near term, the biggest impact on the market is actually really related to what does it mean for tax credit buyers? What we've observed is that a lot of corporate taxpayers There was a huge amount of change that the bill enacted to corporate tax liabilities and how corporations are going to calculate their tax capacity. We have about three hundred active buyers on Crux. We sought data from our buyer segment on whether or not they anticipated changes to their overall tax liability from the one big beautiful bill. About seventy three percent of them said that they did, and then about sixty percent of them said that that would in turn influence the amount of tax credits that they intended to buy. Those significant parts of the market. Our presumption is that corporate tax receipts for twenty twenty five will be down between twenty and thirty percent. All of that to say the tax appetite of the most important tax credit buyer segment has significantly been reduced by some of the tax law change. If we go to the next slide, that has really in turn influenced the volume of activity and deal activity in the market. We have historically observed that as the year goes on, total market volume and the amount of deal activity that is conducted on a quarterly basis that generally rises over the course of the year with the first quarter being the slowest, the fourth quarter being the busiest. That really is not what we're seeing at present. It was not what we saw in the third quarter. There was significant softness in the market in the third quarter with a lot of buyers really, you know, whether or not they will have tax capacity for twenty twenty five, really being engaged in just trying to figure out what the tax law changes mean for them. It's not so much that buyers have all had their tax liabilities wiped out. It's more that the changes in the tax law are really complicated and it takes time for buyers to work their way through that. I think one of the things we are now hearing from buyers is that maybe they did have reduction from bonus depreciation, R and E expensing, things like that, but they are triggering the corporate alternative minimum tax so that their tax liability is being basically adjusted up by the CIMT, which presents another opportunity for those buyers to kind of come back to the tax credit market. So there's a lot of kind of push and pull factors here. The taxpayer is working their way through that, and we would expect to see in the fourth quarter a pretty significant increase in total market volume. The other kind of important caveat here if you're a lender, right, is kind of time is pretty fluid if you're the taxpayer, if you're the buyer in this market. There is no hard and fast timing pressure as to why you have to transact in calendar year twenty twenty five. Buyers that want to take the credit for the tax credits on their quarterly estimated payments certainly do have some incentive to do so then to transact earlier, but that you have to kind of recognize that that benefit exists within the context of a lot of broader uncertainty around what that tax liability is likely to be at the end of the day, right? So There's a push and a pull. We do expect to see a significant amount of volume transact of twenty twenty five tax credits transacting in calendar year twenty twenty six. I think Charlotte shared a few minutes ago that we saw just under six billion dollars of twenty twenty four vintage tax credits transacting this year. It should be a pretty active, sizable part of the market next year as well. For folks that have different kinds of lending arrangements with projects that contemplate particular milestone payments or the sale of tax credits as a particular consideration, just kind of understanding that the market right now, I think, feels a lack of urgency to transact eventually as buyers retain additional confidence in what their tax appetite is, we would expect to see that dynamism return. We are beginning to see it now, just acknowledging though that there's something like seven weeks before the end of the year, so not a whole lot of time. Let's go to our last slide here. The last slide is a forecast. We get this question pretty often, which is basically how much did the One Big Beautiful Bill reduce the overall tax capacity of the market, or how much tax credit generation is going to be affected by changes in the law. The blue line on this chart shows what our forecast was before passage of the O triple B, we essentially would have forecast that the market would continue to grow in total size up to about twenty twenty seven, kind of peaking at about sixty eight billion dollars of tax credits generated, and then declining gently thereafter. When we take out the wind and solar facilities that would no longer be eligible after twenty twenty seven, and particularly into the later parts of this decade, what we see is, of course, a reduction, but we wanted to kind of model a couple scenarios. One is that, we are sort of seeing the incentive to bolster or to upsize the storage component of a facility. We're seeing that incentive is more heavily weighted now because those storage components are retaining access to tax credits, so your ability to recover investments in shared infrastructure, for instance, between a solar and storage facility, might make that an attractive thing to increase as a share of the overall facility mix. What we try to do is model a couple scenarios, one where you just take out your solar and wind projects that are not eligible, sort of first order effect. The other scenario where we sort of increase the share of deployment of the marginally eligible or the facilities that retain eligibility. What we see in both scenarios is that the market does shrink a little bit relative to our pre OB3 case, but not by a huge amount. We generally project a relatively flat year over year market, kind of in the low to mid fifty billion dollar a year level, going through the end of the decade, kind of settling right around fifty billion or forty eight billion in those two scenarios. So that it's generally a pretty positive story. I think the fact that, you know, before the passage of the Inflation Reduction Act, you're looking at a market for roughly twenty billion dollars a year of total tax credit generation. We're really seeing something that's in excess of two times that through the end of the decade. It's a relatively strong market even in spite of those changes. With that, Amy, let me hand it back to you. We can take any of the last questions that we've gotten here. Yeah, sounds great. Thank you, Katie. We have a couple of questions, actually mostly on fiat as we anticipated. Katie, the first question is, what kinds of clean energy projects are viewed most risky with regards to fiat and tech credit eligibility? The second question also regarding fiat is, are there any important diligence points or deliverables for lenders to ensure the projects that they lend to don't inadvertently trigger a fiat risk, given what you shared on effective control? Yeah, so let's start with the first. I think the conventional wisdom right now is that, the US reshoring of supply chains for wind are most mature. The supply chain, if you're developing a wind facility, is typically a de minimis level of China exposure in that, It's kind of the safest aspect of the complex. Secondarily, I think we've seen a huge amount of solar manufacturing that's been reshorred such that at this point, I think the majority of solar projects are also in relatively good shape. The principal risk really in Fiat kind of centers around the battery storage side of the industry. There are a couple of major manufacturers of battery cells and components, particularly BID and cattle that are also big suppliers into the US. Accounting for, that's not an immediate problem. It doesn't necessarily mean that a facility cannot qualify for Fiat, but it does require you to be really careful about that material assistance cost ratio calculation to make sure that the components of the facility that were sourced from a Chinese supplier are not in excess of the thresholds that are articulated by that part of the rule. Those are a couple of, I think, points that are good rules of thumb right now. I think if you speak to a lot of developers, and again, we do have some data on Fiat compliance that we'll be sharing broadly on December eighth is our intended publication date for that information. What you'll generally see is actually that folks, I think, seem to have pretty sound concrete plans as to how they're planning to comply with PHYOC. Probably the biggest question, the biggest area of uncertainty is actually more on the 45X side. That's an area of the market where you do have some entities with Chinese ownership. They've generally, I think, sought to dissolve that Chinese ownership or liquidate that aspect of their ownership so that they don't have that problem going into twenty twenty six. Some facilities may not achieve that quite by December thirty first of this year, but generally speaking, 45X, I think, is the canary in the mind shaft in terms of which parts of the tax credit ecosystem have the most to work through and sort of the least amount of time to do it. Then remind me the other question I think was related to insurance or? Diligence. Diligence. Okay. In the absence of guidance, I should just say, we do expect some regulatory guidance from Treasury within the next couple of weeks. It won't be dispositive, it won't be comprehensive, but it will provide some perhaps initial insight into where IRS intends to go with the FIAC implementation. We're looking for more fulsome guidance from IRS probably in the first quarter of next year, but those milestones will settle, I think, some of the outstanding questions around diligence. Right now, we are seeing is folks are sort of taking a more is more approach. You're looking at supplier certifications. You're counting on your suppliers to make attestations and to source certifications from their suppliers, to put together a comprehensive diligence package. In a practical sense, what we are really seeing for lenders, and especially for tax equity investors, is a near term focus on legacy Section forty eight and Section forty five tax credits. What you're trying to do is you're trying to approach parts of the market where that fiat risk is extremely limited. Fiat does not apply to legacy forty eight and forty five tax credits, so those get a clear kind of advantage in the diligence process. Then the other piece that we're seeing is situations where US based ownership is obvious, the supply chain is really clear, and you can just sort of practically satisfy yourself that the fiat risk is not gonna be thrown over on the project. Those are the kinds of situations that I think people are approaching first and then we're waiting for greater standardization on what are the necessary diligence items after guidance has been released. Thank you, Katie. I think we actually have one more question. The question is, why is it so hard to invest in resi or C and I solar projects? I can answer this. I'd say at a high level, it's challenging relative to TLR scale solar portfolios from a diligence and funding perspective. So when you're comparing a one hundred megawatt utility scale portfolio with two fifty megawatt each versus a one hundred megawatt resi or C and I with five to ten megawatt each within that portfolio, the diligence undertaken is exactly the same. So it becomes extremely cumbersome to undertake that exercise from a diligence perspective. In resi, I would say also a series of bankruptcies we had in the space with SunPower, Sunnova also affected generally investor sentiment overall. And also some lenders in the resi space historically have really struggled with getting individuals as the off taker and don't view an aggregated portfolio with individuals with FICO scores as positively, just relative to an investment grade utility as an off taker, for example. I think from a funding perspective as well, there are specific funding conditions in the credit agreement. So if you'd have to get an IE certificate or a Norse de Borrowing or Lien Waivers for each of these projects to fund, again, it becomes a very cumbersome process. That said, despite the market noise at Crux, we've been continuing to support resi and C and I solar developers finance their projects at various stages. And we've been able to observe lender appetite continue to exist in this space. Of course, it really comes down to very quality sponsors with quality projects. And of course, investors and lenders being very, very selective to finding investment opportunities in the space. But I would say those are probably some of the kind of key risks that we've been able to observe, in the resi and C and I market, recently.