Foss & Company's $150 Million Illinois Deal Shows How Section 48E Financing Actually Works
One of the industry's first Section 48E tax equity deals confirms distributed energy financing is still open, with a new compliance layer now built into every transaction.
By Keith Reynolds | Publisher & Editor, ChargedUp!
$150 million. That is the size of the tax equity investment Foss & Company closed on August 19 to finance a portfolio of distributed solar projects across Illinois, one of the first deals in the country structured under the new Section 48E Clean Electricity Investment Tax Credit. For owners weighing whether tax-advantaged financing for onsite or community-scale generation is still workable after this year's federal tax changes, the deal is a working answer: yes, but with a new compliance layer built into every transaction.
A Familiar Partner Tests a New Framework
The financing extends an eight-deal relationship between Foss & Company, a national tax equity investor and fund sponsor founded in 1983, and Summit Ridge Energy, a developer that builds, owns, and operates distributed solar and battery storage. This transaction is structured through a joint venture between Summit Ridge and Apollo Global Management, and it finances a portfolio of Illinois community solar projects, the kind of distributed generation that sells subscriptions to commercial and residential customers rather than serving a single building.
The relevance for property owners is not the subscription model itself. It is what the deal demonstrates about financing mechanics for any distributed energy project, onsite or community-scale: tax equity investors are still writing checks for behind-the-meter generation, and an established partnership with eight prior closings still needed real diligence work to get this one done.
The Deal Mechanics Behind the Headline Number
Tax equity financing exists because most project developers cannot use the full value of a federal tax credit themselves. A tax equity investor like Foss & Company provides upfront capital in exchange for the credits and a share of project cash flow, monetizing an incentive the developer could not otherwise capture at full value. Section 48E, the technology-neutral successor to the prior investment tax credit regime, is what this portfolio's credits are generated under, and the Illinois projects qualify for a stack of additional adders, including Domestic Content, Energy Community, and Low-Income designations that increase the credit's value when specific sourcing, location, or beneficiary conditions are met.
More than half of the projects are expected to participate in Illinois' Adjustable Block Program, which anchors 15- or 20-year renewable energy credit streams with creditworthy commercial subscribers. That structure pairs a federal tax credit with a long-duration state-level revenue stream, the same layering logic that underpins most successful distributed energy financing regardless of market: one incentive lowers the capital cost, and a separate, longer contract secures the revenue that repays it.
FEOC Compliance Becomes a New Diligence Layer
The deal's timing matters as much as its size. Foss & Company described the closing as one of the industry's first announced tax equity transactions under Section 48E, and getting there required the parties to navigate new Foreign Entity of Concern (FEOC) requirements introduced under the One Big Beautiful Bill Act. Those rules restrict tax credit eligibility based on the ownership, debt structure, and supply chain of the entities involved, and they apply even to a partnership as established as this one. Summit Ridge Energy's chief investment officer, Adam Kuehne, said navigating the FEOC requirements on the firms' eighth deal together spoke to the depth of the relationship, a comment that is really a warning to less experienced sponsors: familiarity with a financing partner does not exempt a project from the new compliance review.
For any owner financing distributed generation through tax equity, a PPA, or a similar third-party ownership structure, that compliance layer is now a standard diligence item, not a one-time hurdle tied to this year's transition. Equipment sourcing, ownership structure, and documentation now belong in the same financing checklist as interconnection studies and utility tariff review.
What This Means for Owners Financing Their Own Distributed Energy
The Illinois portfolio is community-scale, not onsite, but the financing lesson translates directly to buildings pursuing their own solar, storage, or microgrid projects. Tax equity and similar third-party ownership structures remain active and available after this year's federal tax changes, and a strong sponsor relationship still gets deals done, but every deal now carries a compliance cost that was not part of the underwriting model a year ago. Owners evaluating a PPA or tax-equity-financed project should ask their developer directly how FEOC compliance is being documented, since that answer now affects both the project's timeline and its final financing cost.
The revenue side of the Illinois deal offers a second lesson. Pairing a federal tax credit with a long-duration, creditworthy revenue contract, whether that is a state REC program, a corporate PPA, or a lease structure tied to a building's own tenant roster, is what actually secures financing in the current environment. A project with strong credit value but no comparable long-term revenue certainty will be a harder sell to tax equity investors than this Illinois portfolio was, and that gap in revenue durability is now the more important factor separating deals that close from deals that stall, more so than the credit's face value alone.
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