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For every level of laundry needs.

Americans love laundry. Of the common household chores, it is
by far the most popular — and the most energy-intensive. Washing and drying a load of laundry every two days for a year generates roughly the same emissions as driving from Chicago to New York and back again in a gasoline-powered passenger vehicle. Nearly three-quarters of those emissions come from drying alone; meanwhile, according to the Environmental Protection Agency, the average washing machine generates up to 8% of a home’s total energy use. The whole process can cost up to $150 per year in electricity alone, depending on where you live and the frequency of your washes.
With some regulatory prodding, manufacturers have tried to improve water and energy efficiency in new appliances and have rolled out fancy new features like “smart” water-level sensors, vibration reduction technologies, and microfiber-catching filters. But not every house — or budget — has room for the latest and greatest technologies, and systems that would work well in an airy Los Angeles laundry room might make less sense in a drafty apartment in Minnesota.
Heatmap is here to remove some of the guesswork from upgrading one of your home’s most-used appliances. Here is our expert panel’s insight into when and how to purchase a new washer and dryer for your home.
Joanna Mauer is the deputy director of the Appliance Standards Awareness Project, a non-profit advocacy group pushing for stricter energy efficiency legislation. In her role at ASAP, Mauer works with the Department of Energy on its efficiency rules for residential appliances. She has previously worked for the Environmental Protection Agency and the Center for Integrative Environmental Research.
Amber McDaniel is the head of content at Sustainable Jungle, a website and podcast that publishes tips, tricks, and product reviews, including for major household appliances, with a focus on environmentally friendly solutions.
Scott Flint is a licensed California appliance tech with 30 years of experience. He is known as the Fix-It Guy on his YouTube channel, where he promotes the upkeep and repair of home appliances to extend their use. He has also written extensively about washers and dryers for publications such as The Family Handyman, Taste Of Home, and Earth911.
Peruse the latest washers and dryers and you’ll see features like sensors that adjust the water level to match the load of laundry, voice-activated start buttons, WiFi-enabled push notifications for when it’s time to move a load to the dryer, and more. And while there are environmentally friendly upsides to some of these features, “the more simple the machine, the less likely that things will fail,” Flint told me. In his experience repairing hundreds of washers and dryers over the years, “People save money on their initial purchase and the machine is going to last longer if you can minimize the features.”
The Energy Star certification is a great starting point in your shopping journey. But it shouldn’t be the be-all, end-all of your research. Energy Star represents a range of efficiency standards from different brands, with only the top models earning a “ Most Efficient” distinction.
You’ll still want to read reviews to get a better understanding of the reliability of the products you’re looking at, too. Though many new features on the market promise water and energy savings, they’re harder to repair yourself, meaning any potential fixes can get expensive. They can also have shorter lifespans than simpler models.
Eco-friendly washers and dryers are great for a whole laundry list (get it?) of reasons: They lower your household energy bill, they reduce emissions, they reduce wasted water, they’re often easier to install, and they can be gentler on your clothes. But they don’t necessarily save you time. Energy-efficient electric dryers can take up to twice as long to dry your clothes than traditional gas dryers. Still, all of our expert panelists agreed the upsides outweigh the drawbacks.
Yes, this is a buying guide for purchasing a new washer and dryer. But before you spend money on new appliances, you should consider working with what you already have.
If you’re dealing with an old or sub-optimally functional machine and wondering whether now is the time to upgrade, repairing your existing washer or dryer can actually be a smarter and thriftier solution; in fact, Consumer Reports only recommends replacing a dryer if it’s over 10 years old, electric, and cost less than $700 when you initially purchased it. Often, whatever’s going on doesn’t even require a professional to fix. “I think only rarely — let’s say about 20% of the time — would most people need to call in a technician,” Flint told me. Most washer and dryer problems are something you can fix using “normal household tools.” (More on that later.)
Keep in mind, even if you have an old washer or dryer that isn’t very energy efficient, “that’s still not even going to come close to touching the amount of energy that was used to produce and ship a new machine,” McDaniel told me. When your washer or dryer “actually fully stops working and it’s not doing what you need it to do — that’s when it’s time to upgrade.”
Typically, 1.5 to 3.4 cubic feet of capacity is suitable for a one- to two-person household, 3.5 to 4.4 cubic feet will do for two to three people, and 4.5 or more cubic feet will serve a household with more than three people. But having a new baby or pets might mean you do more loads of laundry than an average household, in which case sizing up is better.
Flint told me a common mistake he sees people make is overloading their washing machines, which can destroy an appliance’s rear bearing — the part of the machine that helps the drum rotate smoothly — a repair that is often so costly, it can make more sense to junk the whole machine. On the other hand, running small loads in a large-capacity washing machine can mean wasting water cleaning not-as-many clothes. Consider what washing machine would make the most sense for your needs to maximize efficiency.
Energy and water efficiency are two of the most common considerations when buying a washer and dryer, and are the primary focus of this guide. Some consumers may have additional concerns — McDaniel, for example, recommended looking for a Restriction of Hazardous Substances certification, which signals that an appliance complies with limits on heavy metals like lead and cadmium. Ethical considerations — including a manufacturer’s contributions to armed conflicts, labor practices, and sourcing of conflict minerals — are also worth close inspection. Ethical Consumer offers an excellent guide for finding a brand that best aligns with your values.
“The first thing that we always recommend is: If you need something new, try to go refurbished,” McDaniel told me. Still, there’s a right way and a wrong way to make a major second-hand purchase. McDaniel suggested going through a reputable source that offers a warranty, such as Best Buy (when searching online, make sure to filters for “Energy Star” and “open box” and check the product’s condition).
If you prefer the security of a new product, then it’s time to familiarize yourself with the Energy Star website. You can sort by Energy Star Most Efficient, which are the best of the best, as well as by price, brand, volume, front-load vs. top-load, vented, ventless, heat pump, gas, electric, and more. Energy Star also makes it easy to compare the specs of different products (just tick the “compare” box next to the machines you’re looking at, then scroll to the top to hit the orange “compare” button when you’re ready).
Dryers are the biggest energy suck in most homes, using two to four times as much energy as new washers and nearly twice as much as new refrigerators. McDaniel told me they are also responsible for the greatest wear and tear on clothes. Dryers are an especially American phenomenon; while more than 80% of households in the U.S. own a dryer, just 30% of European households do. That is to say, you probably don’t actually need one, and if you need to save money or space in your laundry routine, this would be the best place to look to make a cut.
“Not relying on a dryer is huge. I only use mine in the wintertime, and in the summer, I line dry my clothes — and the only reason I don’t do that in the winter is I literally don’t have the space inside,” McDaniel said.
Traditional vented dryers — the energy guzzlers of the American home — aren’t the only option anymore, though. The next best thing to a clothesline is a heat pump dryer, which Mauer told me is the “most efficient clothes dryer on the market today,” often far exceeding the Energy Star requirements. Heat pump dryers have a lower maximum temperature, though, so you don’t get that hot-out-of-the-dryer feel when the load is finished. It can also take an hour or more to dry a load of laundry fully. The bright side: Because the heat is lower, heat pump dryers are much gentler on your clothes.
“A big red flag for us is brands that don’t warranty their products in any capacity,” McDaniel told me. Buying a washer or dryer that is durable is important — Flint told me you should expect to get at least a decade of use out of a washer and dryer with proper maintenance and minor repairs — and a warranty is evidence that a company is building a product that they trust to last.
The Electrolux ELFW7637AT has one of the highest energy- and water-efficiency ratings of any washing machine on the market in 2024, with an IMEF of 3.2 and an integrated water factor of 2.6 — both of which are exceptional even by Energy Star’s standards. It also works. Reviewers have lauded its SmartBoost stain removal technology, its internal water heater, and its straightforward controls, although its 85-minute cycle time is a little longer than many other washers on the market.
Both Flint and McDaniel spoke highly of the German brand Miele, which makes this compact washing machine. Though its capacity is about half that of the Electrolux and it didn’t earn Energy Star’s highest level of certification (it has an IMEF of 2.9 and a IWF of 3.2), it is one of the more reliable and best-reviewed washers on the market.
Admittedly, you have to pay for that kind of dependability — Miele is a high-end brand with a sticker price that reflects it. The WXI860 gets high marks for its cleaning ability, including fill-and-forget auto-dispensing features, and boasts 72% lower energy consumption than conventional washers. Additionally, Miele has “a honeycomb-drum technology, so that when it puts the clothes in the spin cycle, it creates a thin film of water between the drum wall and the laundry,” McDaniel told me, which helps prevent clothing fibers from getting caught. “Little features like that that help keep our clothes in circulation for longer are also more sustainable.”
Mauer swears by heat pump dryers, and there are a number of good choices on the market right now. Beko is a favorite of the Sustainable Jungle team, in part because it has a filtration system to stop microplastics from synthetic fabrics from entering the waterways, as well as the company’s ambitious commitments to low-waste and recycled materials. This ventless Beko heat pump dryer is tiny but mighty, making it a great fit for small spaces (it can even fit under the kitchen counter), and it boasts a 2023 “Most Efficient” rating from Energy Star.
Being a heat pump dryer, though, it can take a while to dry clothes — one tester found it took 227 minutes to dry a large, bulky load to 100% — but plan ahead and Beko can give you major savings in the long run. Or, if the Beko isn’t quite what you’re looking for, check out Miele, which makes its own well-reviewed heat pump dryer (although it is small and pricy).
If a heat-pump dryer isn’t right for your lifestyle, the Electrolux ELFE7637AT is one of the more impressive electric dryers on the market right now, earning the Energy Star seal of approval. While it still isn’t super fast (fast takes a lot of heat, which takes a lot of energy, which makes a machine less efficient), reviewers say it can get a large load to 100% dry in 60 minutes if need be. It’s also the best-rated electric dryer on Consumer Reports’ list that isn’t one of the Samsung, LG, or GE models that Flint frequently gets called out to fix.
This combo washer-dryer uses heat pump technology in its dryer, making it one of the more energy-efficient single-unit models on the market. Unlike some of the other options on this list, however, its larger 4.8 cubic foot drum size is big enough for a two- or three-person household. While combo washer/dryers still have some downsides over their two-piece counterparts, including decreased efficiency in cleaning and especially drying, this is one of the better-reviewed units on the market.
Flint told me that you can often find older Kenmore Whirlpool series 80 machines on Craigslist that are “ really good, and tend to sell for about $250 when refurbished, and often come with a one-year warranty.” The only detriment, he said, is that they’re top-loaders — which waste a lot of water — but “if somebody just really needs a tough machine that is going to last, that was a really good design.”
Congratulations! You’re now the proud owner of a new washer and dryer. What happens now?
New washers and dryers are unfortunately not designed with longevity in mind — but that doesn’t mean you need to replace them if something goes wrong after four or five years.
“I can go up to a washing machine that is sitting in the dump, and I can open up the door, and I can spin the spin basket, and I can tell that it’s a perfectly good machine,” Flint told me.
Flint estimates that only about 20% of the time do people actually need to call in a technician to repair their appliances, pointing to fixes like replacing a blown fuse, unsticking a front-load washer that won’t spin, and swapping out a moldy washer door gasket as deceptively simple tasks. Get acquainted with DIY YouTube channels like Flint’s or repair blogs that explain solutions to common problems.
Still, sometimes you need to call in the big guns. In that case, Flint recommends doing your due diligence on a review service like Yelp beforehand.
Once you find someone you like, reach out with the model number of your machine and the symptom you’re experiencing and the technician “should be able to provide you a quote without coming out if they know what they’re doing,” Flint said. If someone does have to come out to figure out what’s going on, then that visit should be free. “Don’t go with someone who’s going to charge you to come out and diagnose the problem and then charge you to fix it.” Repairs to a front-loading washer will probably run around $170, according to Consumer Reports.
You can extend the life of your washer or dryer by following a few more rules of thumb.
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America’s largest renewable developer is swallowing up the utility at the heart of the data center boom.
NextEra Energy, which also owns the utility Florida Power & Light, announced Monday morning that it had agreed to acquire Dominion Energy, the utility that operates in Virginia and the Carolinas. The deal would create an energy giant valued at around $67 billion. It would also — importantly for Virginia and PJM Interconnection, the 13-state electricity market of which the state is a part — create a battery electric storage giant.
The companies said in a Monday presentation laying out the case for the merger to investors that the combined entity would be the largest power company in the United States and the third largest energy company behind just ExxonMobil and Chevron. The companies projected that, when combined, they would be the domestic leader in total generation, market capitalization, rate base, annual capital expenditure, total generation built, and, specifically, battery storage capacity.
NextEra is already a storage leader. Its Florida utility is planning to add 7.6 gigawatts of battery storage over the next decade, and its development arm added almost a gigawatt of storage to its backlog in just the first quarter of this year.
NextEra’s storage expertise couldn’t come at a better time for Dominion. Virginia passed a law in April mandating that the utility procure 16 gigawatts of short-duration storage and 4 gigawatts of long-duration storage by 2045, with 4 gigawatts of short-term storage coming by 2030. Compare that to a previous state target for Dominion of around 3 gigawatts of storage 2035 and the challenge becomes apparent.
“With NextEra Energy’s world leadership in battery storage, there’s a potential to accelerate Dominion Energy’s capital plan to meet Virginia’s storage goals,” NextEra Chief Executive John Ketchum said on a call with analysts discussing the merger plans.
The market Dominion operates in in Virginia, PJM Interconnection, has long been a laggard in bringing new storage resources onto its grid, thanks to its famously dysfunctional interconnection queue. Although its newly refreshed queue has seen a large increase in storage projects compared to when the organization closed it to new projects in 2022, the market is still well behind storage-friendly peers like California and Texas.
PJM has also become notorious more recently for its capacity market, which has fueled price increases across the region in the billions of dollars, and yet failed to procure the reserve margin PJM typically aims for in its most recent auction. “Given that we’re the world’s leader in battery storage and the legislation that was just passed by Virginia, there is a tremendous opportunity to meet that capacity short quickly by deploying battery storage in the right places,” Ketchum said Monday. “We know what a big impact battery storage can have, and how quickly it can have it on capacity-short positions. And so we look at a Dominion in Virginia with [a] short capacity position — I think there’s a real opportunity to accelerate investment.”
The proposed deal comes at a time of rising prices and public anger at utilities up and down the Eastern Seaboard, and especially in the Mid-Atlantic. Dominion’s rates in Virginia have risen around 36% in the past four years, according to the Heatmap-M.I.T. Electricity Price Hub, while typical bills have risen from about $96 per month to $146 per month. Virginia’s rates have grown faster than average in PJM, but are still well below the increases in states like Maryland and New Jersey despite serving a fast-growing data center industry.
While elected Democrats in PJM states regularly bash utilities (see: New Jersey and Pennsylvania), it’s possible that both Virginians and Virginia might look favorably on NextEra, Jefferies analyst Julien Dumoulin-Smith wrote in a note to clients Monday. “If [NextEra] focuses on storage development under the new Democratic legislation recently passed, it could form a coalition of support; we believe this is [a] critical point that could make the deal approval process less bumpy than some other recent M&A deals.”
Morningstar analyst Andrew Bischof saw the deal as allowing each side to use the other’s expertise (and balance sheet) to ramp up investment. Dominion might be able “leverage NextEra’s strong balance sheet to accelerate investment, particularly in Virginia,” whereas NextEra “could accelerate its data center ambitions, which had trailed those of its regulated peers, by using Dominion’s expertise and relationships to expedite NextEra’s data center hub plans,” he wrote in a note to clients Monday.
Building out more storage could also be great for a regulated utility like Dominion, as it would get to put new resources into its rate base and garner a return on equity.
“The General Assembly just added new storage requirements for us, which we think are going to be great for our customers, being able to work with Nextera and this combined company on that,” Dominion chief executive Robert Blue said on the call. “I think this is really going to benefit our customers as we serve them better and will deploy capital faster that way.”
On Thacker Pass, the Bonneville Power Administration, and Azerbaijan’s offshore wind
Current conditions: New York City is bracing for triple-digit heat in some parts of the five boroughs this week • The warm-up along the East Coast could worsen the drought parching the country’s southeastern shores • After Sunday reached 95 degrees Fahrenheit in the war-ravaged Gaza, temperatures in the Palestinian enclave are dropping back into the 80s and 70s all week.
Assuming world peace is something you find aspirational, here’s the good news: By all accounts, President Donald Trump’s two-day summit in Beijing with Chinese President Xi Jinping went well. Here’s the bad news: The energy crisis triggered by the Iran War is entering a grim new phase. Nearly 80 countries have now instituted emergency measures as the world braces for slow but long-predicted reverberations of the most severe oil shock in modern history. With demand for air conditioning and summer vacations poised to begin in the northern hemisphere’s summer, already-strained global supplies of crude oil, gasoline, diesel, and jet fuel will grow scarcer as the United States and Iran mutually blockade the Strait of Hormuz and halt virtually all tanker shipments from each other’s allies. “We are taking that outcome very seriously,” Paul Diggle, the chief economist at fund manager Aberdeen, told the Financial Times, noting that his team was now considering scenarios where Brent crude shoots up to $180 a barrel from $109 a barrel today. “We are living on borrowed time.”
The weekend brought a grave new energy concern over the conflict’s kinetic warfare. On Sunday, the United Arab Emirates condemned a drone strike it referred to as a “treacherous terrorist attack” that caused a fire near Abu Dhabi’s Barakah nuclear station. The UAE’s top English-language newspaper, The National, noted that the government’s official statement did not blame Iran explicitly. The attack came just a day after the International Atomic Energy Agency raised the alarm over drone strikes near nuclear plants after a swarm of more than 160 drones hovered near key stations in Ukraine last week.
We are apparently now entering the megamerger phase of the new electricity supercycle. On Friday, the Financial Times broke news that NextEra Energy is in talks with rival Dominion Energy for a tie-up that would create a more than $400 billion utility behemoth in one of the biggest deals of all time. The merger talks, which The Wall Street Journal confirmed, could be announced as early as this week. The combined company would reach from Dominion’s homebase of Virginia, where the northern half of the state is serving as what the FT called “the heartland of U.S. digital infrastructure serving the AI boom,” down to NextEra’s home-state of Florida, where the subsidiary Florida Power & Light serves roughly 6 million customers. While Dominion dominates data centers in Northern Virginia, NextEra last year partnered with Google to build more power plants and even reopen the Duane Arnold nuclear station in Iowa.

Trump digs lithium. In fact, he’s such a fan of Lithium Americas’ plan to build North America’s largest lithium mine on federal land in Nevada that he renegotiated a Biden-era deal to finance construction of the Thacker Pass project to secure a 5% equity stake in the publicly-traded developer. Yet the White House’s macroeconomic policies are pinching the nation’s lithium champion. During its first-quarter earnings call with investors last week, Lithium Americas cautioned that the Trump administration’s steel tariffs, coupled with inflation from disrupted shipments through the Strait of Hormuz, could add between $80 million and $120 million to construction costs at Thacker Pass. Most of the impact, Mining.com noted, is expected this year. Once mining begins, the project could spur new discussion of a strategic lithium reserve, the case for which Heatmap’s Matthew Zeitlin articulated here.
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The Department of Energy has selected Travis Kavulla, an energy industry veteran, as the 17th chief executive and administrator of the Bonneville Power Administration, NewsData reported. Founded under then-President Franklin D. Roosevelt in 1937, the federal agency is a holdover from the New Deal era before utilities had built out electrical networks in rural parts of the U.S. Unlike the Tennessee Valley Authority — which functions as a standalone utility that owns and sells power, though it’s wholly owned by the federal government and its board of directors is appointed by the White House — the BPA, as it’s known, is a power marketing agency that sells electricity from hydroelectric dams owned by the Army Corps of Engineers and the Department of the Interior’s Bureau of Reclamation. Kavulla currently serves as the head of policy for Base Power, the startup building a network of distributed batteries to back up the grid. He previously worked as the regulatory chief at the utility NRG Energy, and as a state utility commissioner in his home state of Montana. NewsData, a trade publication focused on Western energy markets, cautioned that the Energy Department may hold off on announcing the appointment for “the next few days or weeks” as sources warned that “it might be delayed while the department conducts a background check, or to allow the new undersecretary of energy, Kyle Haustveit, to be confirmed.”
Reached Sunday night via LinkedIn message, Kavulla politely declined to comment on whether he was appointed to lead the BPA.
Offshore wind may be spinning in reverse in the U.S. as the Trump administration attempts to, as Heatmap’s Jael Holzman put it, “murder” an industry through death by a thousand cuts. But elsewhere in the world, offshore wind is booming. Just look at Azerbaijan. Despite its vast reserves of natural gas, the nation on the Caspian Sea is looking into building its first offshore turbines. On Friday, offshoreWIND.biz reported that the Azerbaijan Green Energy Company, owned by the Baku-based industrial giant Nobel Energy, had commissioned a Spanish company to design a floating LiDAR-equipped buoy for the country’s first turbines in the Caspian. The debut project, backed by the Azeri government, would start with 200 megawatts of offshore wind and eventually triple in size.
Before the wealthy software entrepreneur Greg Gianforte ran to be governor of Montana, he donated millions of dollars to a Christian-themed museum that claims humans walked alongside dinosaurs and the Earth is just 6,000 years old. After winning the state’s top job, the Republican set about revoking virtually all policies related to climate change, including banning the projected effects of warming from state agencies’ risk forecasts. With drought withering the state, however, Gianforte has turned to perhaps the most ancient policy approach humanities leaders have called upon to fix devastating weather patterns: Pray. On Sunday, Gianforte declared an official day of prayer for rain. “Prayer is the most powerful tool we have,” he wrote in a post on X. “I ask all who are faithful to come to God with thanks and pray.”
With construction deadlines approaching, developers still aren’t sure how to comply with the new rules.
Certainty, certainty, certainty — three things that are of paramount importance for anyone making an investment decision. There’s little of it to be found in the renewable energy business these days.
The main vectors of uncertainty are obvious enough — whipsawing trade policy, protean administrative hostility toward wind, a long-awaited summit with China that appears to have done nothing to resolve the war with Iran. But there’s still one big “known unknown” — rules governing how companies are allowed to interact with “prohibited foreign entities,” which remain unwritten nearly a year after the One Big Beautiful Bill Act slapped them on just about every remaining clean energy tax credit.
The list of countries that qualify as “foreign entities of concern” is short, including Russian, Iran, North Korea, and China. Post-OBBBA, a firm may be treated as a “foreign-influenced entity” if at least 15% of its debt is issued by one of these countries — though in reality, China is the only one that matters. This rule also kicks in when there’s foreign entity authority to appoint executive officers, 25% or greater ownership by a single entity or a combined ownership of at least 40%.
Any company that wants to claim a clean energy tax credit must comply with the FEOC rules. How to calculate those percentages, however, the Trump administration has so far failed to say. This is tricky because clean energy projects seeking tax credits must be placed in service by the end of 2027 or start construction by July 4 of this year, which doesn’t leave them much time left to align themselves with the new rules.
While the Treasury Department published preliminary guidance in February, it largely covered “material assistance,” the system for determining how much of the cost of the project comes from inputs that are linked to those four nations (again, this is really about China). That still leaves the issue of foreign influence and “effective control,” i.e. who is allowed to own or invest in a project and what that means.
This has meant a lot of work for tax lawyers, Heather Cooper, a partner at McDermott Will & Schulte, told me on Friday.
“The FEOC ownership rules are an all or nothing proposition,” she said. “You have to satisfy these rules. It’s not optional. It’s not a matter of you lose some of the credits, but you keep others. There’s no remedy or anything. This is all or nothing.”
That uncertainty has had a chilling effect on the market. In February, Bloomberg reported that Morgan Stanley and JPMorgan had frozen some of their renewables financing work because of uncertainty around these rules, though Cooper told me the market has since thawed somewhat.
“More parties are getting comfortable enough that there are reasonable interpretations of these rules that they can move forward,” she said. “The reality is that, for folks in this industry — not just developers, but investors, tax insurers, and others — their business mandate is they need to be doing these projects.”
Some of the most frequent complaints from advisors and trade groups come around just how deep into a project’s investors you have to look to find undue foreign ownership or investment.
This gets complicated when it comes to the structures involved with clean energy projects that claim tax credits. They often combine developers (who have their own investors), outside investment funds, banks, and large companies that buy the tax credits on the transferability market.
These companies — especially the banks, which fund themselves with debt — “don’t know on any particular date how much of their debt is held by Chinese connected lenders, and therefore they’re not sure how the rules apply, and that’s caused a couple of banks to pull out of the tax equity market,” David Burton, a partner at Norton Rose Fulbright, told me. “It seems pretty crazy that a large international bank that has its debt trading is going to be a specified foreign entity because on some date, a Chinese party decided to take a large position in its debt.”
For those still participating in the market, the lack of guidance on debt and equity provisions has meant that lawyers are having to ascend the ladder of entities involved in a project, from private equity firms who aren’t typically used to disclosing their limited partners to developers, banks, and public companies that buy the tax credits.
“We’re having to go to private equity funds and say, hey, how many of your LPs are Chinese?” David Burton, a partner at Norton Rose Fulbright, told me. This is not information these funds are typically particularly eager to share. If a lawyer “had asked a private equity firm please tell us about your LPs, before One Big Beautiful Bill, they probably would have told us to go jump in the lake,” Burton said.
Still, the deals are still happening, but “the legal fees are more expensive. The underwriting and due diligence time is longer, there are more headaches,” he told me.
Typically these deals involve joint ventures that formed for that specific deal, which can then transfer the tax credits to another entity with more tax liability to offset. The joint venture might be majority owned by a public company, with a large minority position held by a private equity fund, Burton said.
For the public company, Burton said, his team has to ask “Are any of your shareholders large enough that they have to be disclosed to the SEC? Are any of those Chinese?” For the private equity fund, they have to ask where its investors are residents and what countries they’re citizens of. While private equity funds can be “relatively cooperative,” the process is still a “headache.”
“It took time to figure out how to write these certifications and get me comfortable with the certification, my client comfortable with it, the private equity firm comfortable with it, the tax credit buyer comfortable with it,” he told me, referring to the written legal explanation for how companies involved are complying with what their lawyers think the tax rules are.
Players such as the American Council on Renewable Energy hope that guidance will cut down on this certification time by limiting the universe of entities that will have to scrub their rolls of Chinese investors or corporate officers.
“It’d be nice if we knew you only have to apply the test at the entity that’s considered the tax owner of the project,” i.e. just the joint venture that’s formed for a specific project, Cooper told me.
“There’s a pretty reasonable and plain reading of the statute that limits the term ’taxpayer’ to the entity that owns the project when it’s placed in service,” Cooper said.
Many in the industry expect more guidance on the rules by the end of year, though as Burton noted, “this Treasury is hard to predict.”
In the meantime, expect even more work for tax lawyers.
“We’re used to December being super busy,” Burton said. “But it now feels like every month since the One Big Beautiful Bill passed is like December, so we’ve had, like, you know, eight Decembers in a row.”