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The Trump administration announced new Treasury Department guidance that will make it more difficult for solar and wind projects to qualify for federal tax credits, though the changes were less severe than some in the clean energy industry had feared.
The updated guidance redefines when a renewable energy project is considered to have “commenced construction,” a key factor for claiming lucrative tax credits. Most wind projects and larger solar projects will now need to demonstrate actual physical construction, rather than relying on the previous 5% investment “safe harbor.” Rooftop solar projects generating less than 1.5 megawatts remain eligible to use the safe harbor.
These changes follow President Trump’s executive order directing Treasury to strictly enforce restrictions on renewable energy incentives, part of the administration’s broader effort to implement provisions in the newly passed tax law. The law phases out existing investment and production tax credits for solar and wind projects producing electricity after 2027 but allows extra time for projects that begin construction within a year.
The new rules, which take effect September 2, 2025, will require projects to demonstrate a continuous construction program, with only limited exceptions for delays. Some developers and tax lawyers have raised concerns that the guidance could conflict with congressional intent and may face legal challenges.
The response from lawmakers has been mixed. The House Freedom Caucus praised the guidance for supporting the administration’s goals, while some senators from wind-heavy states, such as Chuck Grassley (R-Iowa) and John Curtis (R-Utah), have expressed concerns but acknowledged that the guidance strikes a compromise.
Industry leaders criticized the move. Abigail Ross Hopper, CEO of the Solar Energy Industries Association, called it a “blatant rejection” of congressional intent, while Adrian Deveny, founder of Climate Vision, warned it could disrupt hundreds of solar and wind projects under development.
The Trump administration has also taken additional steps across federal agencies, including new permitting restrictions at the Interior Department, signaling continued efforts to limit support for renewable energy projects.
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