How Crux helped Linea Energy navigate new FEOC requirements and close $158M in §48E tax equity

Executive summary

• Crux served as advisor and investor on a $158 million §48E yield-based hybrid partnership flip, providing tax equity for Watertown Solar, a 172-MWdc project in Sanilac County, Michigan.
• The Watertown transaction demonstrates that §48E hybrid partnership flips can be executed at institutional scale, even as sponsors and investors adapt to new FEOC requirements.
• For developers managing complex tax equity transactions against active construction timelines, Crux's centralized execution model compresses the path from term sheet to funding.

An institutional-scale raise, a live construction timeline, and unresolved §48E FEOC requirements

Linea Energy, backed by EnCap Investments, was preparing to raise tax equity for Watertown Solar — a 172-MWdc project in Sanilac County, Michigan, backed by a 25-year power purchase agreement with Consumers Energy. Construction financing led by Santander was already in place. Tax equity therefore had to fit into a capital stack already in motion—and close on the project’s established construction timeline.

The financing came as market participants were navigating a new §48E Foreign Entity of Concern (FEOC) compliance regime enacted under the One Big Beautiful Bill. The application of three core requirements — prohibited foreign entity (PFE) status, foreign-influenced entity (FIE) classification, and material assistance — remained unsettled, with potential consequences for whether a project qualified for the credit at all.

Turning FEOC uncertainty into an executable framework

Crux issued an Indication of Interest to Linea for a facility covering $151M of §48E credits. Together, the teams structured a yield-based hybrid partnership flip that combined tax equity with tax credit transfer proceeds.

Working across Linea, the tax equity investor, and their respective counsel, Crux advised on and negotiated the representations, covenants, and diligence requirements needed to address PFE status and FIE classification at both the investor and sponsor levels — the primary friction points slowing §48E deals across the market. Rather than treating this work as a separate diligence track, Crux integrated it into the same workflow as the transaction's insurance, title, enforceability opinions, and interparty matters, coordinating all parties around a single timeline.

This is the centralized execution model at work: capital structuring and FEOC diligence run as one coordinated process rather than sequential, disconnected negotiations. For Linea, the construction timeline continued to move while the transaction parties addressed the outstanding regulatory questions.

$158M committed to fund on the project’s construction timeline

Crux committed to fund $158 million in tax equity for the 172-MWdc Watertown Solar project, backed by its 25-year investment-grade power purchase agreement with Consumers Energy, without disrupting the project's construction schedule.

"Watertown represents exactly the kind of project Linea was built to execute — a large-scale, long-term clean energy asset paired with creditworthy offtake and an efficient financing structure," said Cassidy DeLine, Chief Executive Officer of Linea Energy. "We are grateful to Crux, Santander, and our full financing team for their partnership in getting this project to the construction phase."

The transaction shows how coordinated structuring, PFE diligence, and execution support can help developers advance complex §48E financings on active project timelines.

Contact us to learn how Crux can help structure and execute your next tax equity transaction.