Tax Credit and Credit Insurance as Financing Enablers for U.S. Digital Infrastructure

Tax Credit and Credit Insurance as Financing Enablers for U.S. Digital Infrastructure
June 9, 2026 13 mins

Tax Credit and Credit Insurance as Financing Enablers for U.S. Digital Infrastructure

Tax Credit and Credit Insurance as Financing Enablers for U.S. Digital Infrastructure

Data centers, as part of U.S. digital infrastructure, face a tighter power market as clean energy tax credits become binary and time-bound.

Key Takeaways
  1. Tax credits have become key deal drivers for many projects. Qualification on timing, sourcing and ownership helps determine who can capture value before incentive windows narrow.
  2. Timing and deliverability shape power outcomes. As incentive windows narrow, projects that are better sequenced and easier to execute are positioned to capture greater value.
  3. Insurance is integral to bankability. Tax credit and credit insurance can help protect expected value, facilitate financing and support long‑dated power arrangements, particularly where credits are used and subject to insurer appetite and specific policy terms.

Table of Contents

  1. Power Constraint Challenges for Developers

  2. Status of U.S. Clean Energy Credits, Tax Credits and Transferability

  3. Technology Split — Where Power Options Expand or Shrink

  4. Cost and Bankability in the New Reality

  5. How Insurance Enables Digital Infrastructure Financing

  6. Important Next Steps for Each Sector

Digital infrastructure energy is entering a new phase. Power demand continues to rise, and access to clean, reliable and cost-stable electricity is becoming a strategic constraint for growth.

For U.S. data centers, the energy conversation has moved from sustainability ambition to delivery reality. The market has many options, from more renewables to storage and grid investment. Yet, growth is increasingly constrained by time, equipment availability, interconnection capacity and permitting throughput.

Data center developers are increasingly turning to insurance products as part of their risk and capital management toolkit. Tax credit and credit insurance can help support capital deployment, facilitate transfers and underpin long-dated offtake, depending on transaction structures and insurer appetite.

The near-term winners will be digital infrastructure stakeholders who treat power as a front-end development constraint and manage it with the same rigor as land, fiber, entitlements and capital. The constraint is not just “more electricity,” but electricity that is reliable, renewable and cost-stable for the long term — all while delivering on the timelines that digital infrastructure capital expects.1

“Data centers need all forms of energy,” says Carol Stark, Managing Director, Renewable Energy Practice Leader, North America. “But renewable energy will always be an important source of energy for all countries with data centers.”

Solar paired with storage is among the quickest to deploy. It’s deliverable and configurable, allowing developers to shape output, manage intermittency and build redundancy into power plans. In financing terms, the more a project can reduce uncertainty around delivery and performance, the closer it gets to investment-grade treatment.

  • 1.5%

    Percent of global electricity consumed by data centers in 2025. It is projected to double by 2030.

    Source: IEA

  • 60%

    Percent of corporate power purchase agreement (PPA) activity used by U.S. data centers in 2024, with hyperscalers like Amazon, Google, Microsoft and Meta dominating offtake volumes.

    Source: PV Magazine

  • 12%

    Projected percent of U.S. electricity consumption by data centers by 2028.

    Source: DOE

Power Constraint Challenges for Developers

Permitting delays, grid congestion and an aging grid infrastructure are among the key constraints that are creating challenges for data center developers. The traditional playbook, which procures renewables, assumes credits, signs a long PPA and moves on, is now harder to execute. Power strategies need to be both low-carbon and deliverable within tighter rules and shorter timelines.

However, the renewable energy sector faces well-documented risk factors that can undermine price certainty and delivery schedules. Renewable energy “red flags” highlight inflation and cost fluctuations, geopolitical risks and supply chain restrictions as obstacles that can threaten momentum.  

Incentives can improve economics, but they do not compensate for delays, interconnection risk or execution challenges. For data center developers, the focus is shifting from access to renewable capacity in principle to securing power that can be delivered on schedule and structured to meet financing expectations.

That shift is critical because electricity demand from data centers is projected to rise sharply this decade and requires a mix of renewables, dispatchable supply and grid upgrades.2 As procurement strategies evolve — including longer dated PPAs and portfolios combining renewables with storage — scrutiny of delivery risk, counterparty strength and performance certainty is increasing. In this environment, bankability is earned through execution, rather than assumed.

Status of U.S. Clean Energy Credits and Transferability

Clean Energy Credits: Recent U.S. tax and regulatory developments have introduced more defined timing rules and termination provisions for certain wind and solar facilities, including requirements relating to when construction must begin and when facilities must be placed in service. The details of these rules are complex and subject to change, and project sponsors should consult their own legal and tax advisors to understand how they apply in practice.

Data center development schedules often prioritize speed to power and interconnection realities; the incentive clock can now force developers into tighter sequencing between site selection, interconnection milestones, equipment procurement and construction commencement evidence. In practice, tax incentives are behaving less like baseline assumptions and more like value opportunities that reward preparedness and execution discipline.

Through 2027, there will likely be a rush to qualify projects and close PPAs while credit value can still be captured. Growth is occurring under tighter grid and permitting constraints. Hyperscaler demand for 24/7 clean power is pushing more sophisticated renewable procurement structures, including time-matched PPAs and portfolios combining renewables with storage. This then increases capital intensity and financing complexity.3

Transferability: Transferability remains available under current regulations, but projects generally need robust audit-ready support for eligibility, including around timing, domestic content and foreign entity considerations. Effective contractual protections can help to address risks to credit validity, subject to the advice of clients’ own legal and tax advisors.

As power constraints increase and procurement strategies advance, developers must meet stricter compliance and financing requirements to retain incentives, directly impacting market expectations and deal outcomes.

Technology Split — Where Power Options Expand or Shrink 

There is no clear “winner” in powering digital infrastructure; developers must sequence technologies and manage risks as policy windows close and reliability becomes crucial. 

  • Wind and Solar

    Wind and solar remain attractive where projects can be delivered quickly. Eligibility windows and execution risk now favor shovel-ready assets with near-term commissioning, as delays can erode both pricing advantage and financing certainty.

  • Storage

    Storage is rapidly becoming the backbone of renewable-led strategies. Notably, storage technologies have been spared from the most aggressive credit rollbacks affecting generation, which brings two strategic advantages for data centers. First, batteries are increasingly essential as a hedge against the intermittency of renewables, particularly as solar and wind credits taper off. Second, storage enables behind-the-meter and hybrid configurations, which help stabilize power costs and improve uptime in regions where grid reliability is uncertain.

  • Geothermal and Hydro

    Geothermal and hydro provide valuable diversification and dependable baseload power in locations where they are viable. The credit horizon for geothermal is comparatively long, offering greater planning certainty and reducing downside risk from policy changes. Hydropower, while expected to deliver only modest growth in renewable additions by 2030, is prized for its flexibility. Pumped storage is poised for faster expansion as grids adjust to higher levels of variable renewables.4

  • Fuel Cells

    Fuel cells are moving from niche to strategic, driven by resilience and speed to power needs. Behind-the-meter systems are increasingly relevant, offering technologies that can help meet data center power demand.5

Cost and Bankability in the New Reality

Tax credits still drive a meaningful share of project economics when they are attached. Federal incentives for clean power are large enough that U.S. budget analysts expect materially less wind/solar investment without them.

Bankability has pivoted from “model the incentive” to “evidence eligibility, preserve it and keep counterparties performing.” Expect tougher risk gatekeeping, including potentially tighter risk-transfer capacity in the insurance market supporting these deals.

How Insurance Enables Digital Infrastructure Financing

Two insurance instruments — tax credit insurance and credit insurance — sit in the “financing enablement” layer for these projects.

1. Tax Credit Insurance: Converting Compliance Anxiety into Certainty

Tax credit insurance transfers defined tax risks (e.g., credit disallowance, reduction, recapture-related exposures, depending on policy terms) so credit buyers, lenders and boards can proceed with transactions that rely on Inflation Reduction Act credits and their transferability. 

Tax credit insurance has been a critical enabler for more than a decade and is now commonly used to protect against the financial consequences of a tax authority disallowing, reducing or recapturing credits, including interest and penalties. 

Benefits of Tax Credit Insurance

  • 02
    Financing

    May help improve financing terms by reducing perceived downside risk

  • 03
    Timing

    Helps projects reach financial close within compressed construction and qualification timelines

As part of the 2026 “One Big Beautiful Bill,” solar projects will be eligible for tax credits as long as construction is started prior to July 1, 2026 and are placed in service within four years. Beyond this safe harbor, stringent rules relating to foreign ownership, control and influence kick in.6

“Tax credit insurance helps secure the economic value of developer indemnities and adds certainty amid the increasingly complex qualification rules and slowly developing regulatory guidance, says Jessica Harger, Head of Aon’s Tax Insurance Practice, North America. “This is particularly relevant as developers race to qualify projects under pre-OBBB rules and seek to adapt to the current regime.”

https://www.aon.com/en/capabilities/risk-transfer/credit-solutions

Case Study

Tax Credit Insurance Successfully Enables ITC Sale
To monetize Investment Tax Credits (ITCs), the sponsor/developer co-locating a solar PV and battery storage system with a large data center planned to bring in a tax equity investor and a separate third party tax credit buyer, which required an ITC policy. Aon placed a large ITC insurance policy with a multiyear term, providing coverage for structural and qualification risks and recapture-related tax risk associated with the ITCs, subject to the policy’s specific terms and conditions. The ITC sale, supported by the insurance policy, was important in securing the capital required to develop the project. The buyer gained greater certainty around tax outcomes, enabling it to proceed with the purchase.

2. Credit Insurance: Quietly Expanding Financing Capacity

Credit insurance is designed to help address counterparty non-payment/default risk in project revenue contracts. This can include long-term offtake arrangements (corporate PPAs and virtual PPAs) and certain financing exposures, subject to insurer appetite and policy terms.

This becomes relevant when renewable developers (or their lenders) need to treat revenue as “bankable,” and when financiers manage concentration and tenor constraints.

“Credit insurance is typically seen as a risk mitigant, but we're increasingly seeing it as a tool for growth. It’s now surpassed safeguarding and is helping energy clients navigate volatility, adapt to the renewables transition and manage the uncertainties that define today’s market,” says Madeleine Whiteley, Client Director, Credit Insurance, United Kingdom.

Credit insurance can, in some circumstances, support renewable build-out by helping to mitigate nonpayment risk of PPAs and other contractual structures, which may assist developers in seeking financing. Lenders can also distribute large exposures more efficiently across balance sheets. This is particularly relevant as PPA tenors extend to 15-25 years to match data center load requirements and renewable asset lives.

Credit Insurance Manages Market Volatility

Case Study

Credit Insurance Manages Market Volatility
A European international energy company was entering into a long-term PPA with a corporate offtaker, supplying renewable energy from wind farms to power a Netherlands data center. Typically, credit insurance is purchased to manage counterparty credit risk, however, it was not needed because of the offtaker's strong credit rating. Instead, credit insurance was purchased to help mitigate significant counterparty exposure and market price volatility. Aon worked to cover a substantial portion of the potential exposure, with the remainder supported by a parent guarantee. With market pricing increasing, the timing was right for the client to consider mitigating those exposures.

Important Next Steps for Each Sector

Data Center Owners, Operators and Landlords
  1. Prioritize near-term PPAs with developers who can evidence credible start by deadline plans, compliant supply chains and appropriately structured and, where suitable, insured credit outcomes.
  2. Build post-window pricing scenarios. Consider battery storage-anchored portfolios to steady costs and availability.
Renewable Energy Providers
  1. Treat compliance, traceability and domestic content as competitive advantages; embed them from day one.
  2. Use tax credit insurance to help firm eligibility and credit insurance to help support debt and offtake bankability.
Investors (Infra Funds, Lenders, Corporate Buyers)
  1. Re-underwrite pipelines with time-sensitive assets first; scrutinize start tests and FEOC exposure with appropriate professional advice. Pair transferability with tax credit insurance. Deploy credit insurance, where appropriate, to scale exposure without breaching concentration limits.

As digital infrastructure energy enters a new phase and the power market continues to tighten, developers must continue to proactively manage their energy risk, capital and bankability.

Planning Beyond the Cliff
  1. Expect tighter supply and upward pressure on green-power prices for new wind/solar after the window.
  2. Diversify technologies (storage, geothermal, hydro, selective fuel cell) and geographies; build optionality into procurement.
  3. Make risk transfer one of the tools considered in deal design to help keep renewables investment-grade in a policy-volatile environment.

Insurance and risk advisory professionals can play an important role in helping clients navigate complexity, align risk and capital and unlock growth through informed decision making. If you are ready to evaluate your data center risk program, contact us to start a conversation.

1 How data centers and the energy sector can sate AI’s hunger for power, McKinsey
2 As generative AI asks more power, data centers seek more reliable, cleaner energy solutions, Deloitte
3 How hyperscalers are fueling the race for 24/7 clean power, McKinsey
4 Renewables 2025, IEA
5 Fuel Cells Could Help Meet the Power Demand from Data Centers
6 Generating Results for Renewable Energy Projects with Tax Incentives, Aon

Aon’s Thought Leaders
  • Alice Black
    Structured Finance Lead, Aon Credit Solutions
  • Jessica Harger
    Managing Director, M&A Transaction Solutions, North America
  • Gary Lorimer
    Global Growth Leader, Credit Solutions
  • David Mittelholzer
    Global Industry Specialty Leader, Natural Resources
  • Carol Stark
    Managing Director and Renewable Energy Practice Leader, North America
  • Madeleine Whitely
    Senior Client Manager, Structured Credit & Political Risk, Europe, the Middle East, Africa

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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