Solar tax equity is the process of investing in someone else’s solar panels to reap the tax benefits from the solar panel. Because tax equity investors in solar put money into the solar panel installation, they can claim part ownership and therefore the tax benefits.

In most solar tax equity structures, the tax equity investor will put in 40% of the purchase price of the solar panels in exchange for 100% of the tax benefits. Tax benefits vary, usually by state, but almost all of them provide benefits for 3rd party tax equity financing of solar projects.

Solar tax equity investment is a win-win for both parties. The solar panel owner gets the benefits of reduced energy costs and discounted solar panels while the tax equity investor gets to write some of the value of the solar panel off of their taxes.

- https://www.indinero.com/blog/what-is-solar-tax-equity/