Currents Ep331: Cost of capital: 2026 outlook
13 snips
Jan 22, 2026 
Rubiao Song, Managing Director at J.P. Morgan, and Ralph Cho, Co-CEO of Apterra Infrastructure Capital, dive into the evolving landscape of tax equity and project financing. They share insights on the expected surge in tax equity and credit volumes for 2025, highlighting the emerging trends in solar-plus-storage. The conversation also covers the impact of new tax credits on financing structures, residential solar risks, and innovative developments in the tax equity market, while projecting a busy pipeline for 2026 amidst ongoing policy challenges.
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Tax Equity Now ~45% Of Capital On Many Projects
- Tax equity participation has risen to roughly 40–50% of capital stacks on many projects, centering around ~45% on average.
- Rising project costs and inflation are pressuring tax equity's share downward versus prior years.
Get FIAC Risk Allocation And Guidance In Writing
- Don't rely solely on pushing FIAC risk onto sponsors; seek clarified Treasury/IRS guidance and negotiate risk allocation.
- Insist on contractual clarity because ambiguous FIAC obligations create financing and indemnity disputes.
PAM Adoption Lowers Cash Needs And Control
- Many tax equity investors adopt PAM accounting, which can reduce cash distributions and investor operational control.
- PAM may be net‑positive for developers by lowering cash to investors and limiting investor influence over operations.