Tax equity isn't just for utility-scale anymore. Here's what qualifies at a smaller size.

A 172 MW Michigan solar deal and a ~$30 million microgrid investment show tax equity scaling down to mid-size and niche assets — reshaping what developers should assume about minimum deal size.

Tax equity financing has long carried an implicit utility-scale minimum in most developers' minds. Two recent deals suggest that assumption is now outdated.

Two deals, two different asset classes

Linea Energy and Crux closed tax equity financing for a 172 MWdc Michigan solar project — a real but comparatively modest utility-scale asset, not a flagship gigawatt-class project. Separately, Foss & Company entered the microgrid sector with a roughly $30 million tax equity investment in a Montgomery County transit project — a niche asset class that wouldn't have been a typical tax equity target even a few years ago.

What actually qualifies

The headline lesson from both deals isn't that tax equity minimums have disappeared. It's that tax equity investors are actively looking past the largest utility-scale deals to mid-size and niche assets that have a clear, bankable revenue structure — whether that's a standard solar PPA or a transit-authority microgrid contract. For a commercial developer or asset owner previously assuming tax equity required a utility-scale minimum, that assumption is worth revisiting on a deal-by-deal basis rather than ruling out.

Four questions before ruling tax equity out

01 — Confirm the actual minimum deal size current tax equity investors in your asset class are underwriting. Rather than relying on a prior assumption about utility-scale minimums.

02 — Identify what makes an asset class bankable to a tax equity investor beyond its size. A standard revenue contract, a creditworthy counterparty, a clear depreciation schedule.

03 — Benchmark against recent comparable deals. Like the Michigan solar or Montgomery County microgrid financings, to see what structure and asset type attracted tax equity capital.

04 — Engage a tax equity conversation earlier in project development. Since niche or mid-size assets may require more structuring work than a standard utility-scale deal to make them bankable.

Where to start

Before assuming a project is too small or too niche for tax equity, benchmark it against what investors are actually financing today — not against a utility-scale minimum that may no longer reflect the market. Surge's capital alignment work includes this kind of tax equity structuring and investor-fit analysis as part of a project's broader financing strategy.