Highwater Ethanol reports Q2 results, closes $14.3 million tax credit sale

Highwater Ethanol on May 29 closed a $14,307,388 sale of 2025 tax credits tied to Section 45Z clean fuel production incentives, giving the Minnesota ethanol producer a cash injection just after it filed second-quarter results. The deal was struck with a North Dakota banking corporation and included a right of first refusal through January 31, 2027 on up to $14 million a year of 2026 through 2029 45Z credits on the same terms.

The company’s Form 10-Q covered the quarter ended April 30, 2026 and listed 4,749 membership units outstanding as of June 12. Highwater Ethanol is headquartered at 24500 US Highway 14 in Lamberton, Minnesota, where it was formed on May 2, 2006 to construct, own and operate an ethanol plant near the town.

For ethanol producers, the 45Z sale is the more telling line item than the routine filing. It shows how a mid-sized plant is monetizing clean fuel incentives to support margins in a market still driven by feedstock costs, blend economics and volatile product pricing. Highwater Ethanol said it produces and sells fuel ethanol and co-products through third-party professional marketers across the continental United States, a sales structure that leaves plant-level economics closely tied to market access and basis.

The filing classified Highwater Ethanol as a smaller reporting company and said it is not a shell company. Those designations underscore the scale of the business: a single-site producer with a limited membership base, but one that can still generate material value from federal clean fuel credits when production qualifies.

The 45Z transaction also gives the North Dakota lender a foothold in credits generated over multiple years, a sign that the market for transferable clean fuel tax assets remains active even as producers wait to see how policy, feedstock spreads and fuel pricing settle. For Highwater Ethanol, the sale likely provided a near-term liquidity lift alongside the quarter-end report, while the underlying question for the plant remains the same as for much of the ethanol sector, whether margins can hold once credit revenue, corn costs and ethanol prices are stripped back to the plant gate.