Shortly after the law passed in July, Trump ordered the Treasury Department to review the safe-harbor rules. The directive came after pressure from the ultraconservative Freedom Caucus members in the House of Representatives, who were upset that the law preserved tax credits for wind and solar projects at all. In that same executive order, Trump also told Treasury to develop rules governing “foreign entity of concern” restrictions; those rules, which are still in development, could be even more disruptive to the industry.
“The Treasury Department’s decision to accelerate the phaseout of clean energy tax credits undermines the integrity of our energy grid and our legislative process,” Jason Grumet, CEO of the American Clean Power Association trade group, said in a Friday statement. “Congress explicitly chose to provide energy companies with one year to phase out tax credits to keep energy prices low while meeting growing power demand.”
Friday’s guidance came despite entreaties from Senate Republicans Chuck Grassley of Iowa and John Curtis of Utah, who negotiated the tax-credit amendment to the final bill. Though both senators voted for the One Big Beautiful Bill Act, which cleared the Senate by just one vote, earlier this month they placed holds on three of Trump’s Treasury Department nominees in an attempt to force the administration to negotiate a less harmful change to the safe-harbor rules.
Grassley’s office did not immediately respond to a request for comment on Friday afternoon.
“Frankly, I think the intervention worked,” said Pavel Molchanov, a Raymond James analyst covering cleantech companies. “Treasury could have gone really far in the direction of making life difficult.”
Molchanov cited rules left unchanged in Friday’s guidance, such as the four-year window for projects that commence construction by July 2026 to complete their work to secure their tax-credit eligibility. “Imagine if they had said, ‘Oh, did we say four years? It’s actually two.’”
Similarly, the “physical work” requirements listed in Friday’s guidance are not outside the bounds of what a large-scale solar or wind project developer can reasonably take on over the next year, he said. Exemptions for extreme weather, permitting delays, and other obstacles to continuing work should shield developers from risks of being declared out of compliance with those requirements, he said.
“The good news is that it’s still almost 11 months until July 2026, so developers have plenty of room to make adjustments before starting construction,” Molchanov said. “From my perspective, it’s actually better than expected. But maybe my expectations were just so low to begin with.”
Jeff Cramer, CEO of the Coalition for Community Solar Access, a trade group that represents companies building smaller-scale solar and battery projects, decried the new guidance as a violation of the deal Republicans made in crafting the megalaw. But he also said that simply knowing the rules of the game is a help.
“I think the only good news is that there may now be less uncertainty,” he said. “The onus is now on the states to ensure that any projects that can meet that July 2026 deadline can do that.”
