New Wind and Solar Subsidy Guidance Just Dropped

Breaking News and it's pretty good

We interrupt our regular Saturday morning publication schedule to inform you of some breaking news: On Friday, the U.S. Treasury issued its much-anticipated updated guidance on how wind and solar projects can qualify for subsidies under the One Big Beautiful Bill Act.

According to Bloomberg Tax, the updated guidance came after an executive order by President Trump to revise the language related to the start of construction rules so they’re not circumvented, “including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of the subject facility has been built.”

As a result, the administration has officially ended the five percent safe harbor rules for subsidy eligibility, which essentially allowed wind and solar developers to lock in subsidies for four years after the credits were supposed to expire if they spent five percent of a project's cost up front.

For example, the tax credits were scheduled to expire in 2019. However, if a wind or solar developer spent five percent of the project’s cost on December 31st, 2019, they would have four years to finish construction on the project and still qualify for full federal subsidies.

Now, projects will have to physically start construction "of a significant nature" on these facilities to qualify for the subsidies.

What does "a significant nature" mean?

According to the guidance, for wind projects, it can mean the beginning of the excavation for the foundation, the setting of anchor bolts into the ground, or the pouring of the concrete pads of the foundation. For solar, it may include the installation of racks or other structures to affix photovoltaic (PV) panels, collectors, or solar cells to a site.

It does not mean:

• Planning or designing

• Securing financing

• Exploring Researching

• Conducting mapping and modeling to assess a resource

• Obtaining permits and licenses

• Conducting geophysical gravity, magnetic, seismic, and resistivity surveys

• Conducting environmental and engineering studies

• Clearing a site

• Conducting test drilling to determine soil condition (including testing the strength of a foundation)

• Excavating to change the contour of the land (as distinguished from excavation for a foundation) - Removing existing foundations, turbines, and towers, solar panels, or any components that will no longer be part of the applicable wind or solar facility (including those on or attached to building structures)

By replacing the ability for project owners to spend five percent of the project cost to safeguard their eligibility for the Production Tax Credit (PTC) and Investment Tax Credit (ITC) with a requirement that significant physical work be completed, the Trump administration is almost certainly better aligning these definitions with what the average American thinks of when they hear the phrase "start of construction."

Let's say you're going to spend $2,500 remodeling your bathroom. Does anyone honestly think that spending $125 on a new vanity—from Menard’s, of course— whether it is installed or not, actually constitutes the "start of construction?" Of course not.

The only way you can get a "yes" from someone on that question is if they are trying to justify their access to someone else's money.

There will almost certainly be a wailing and gnashing of teeth over these Internal Revenue Service guidelines from wind and solar advocates, but it should be noted that the Trump administration's changes are more lenient than the subsidy guidance before the Obama administration's rewrite of eligibility requirements in 2013.

According to the Congressional Research Service, before the 2013 rewrite, projects needed to be placed in service before the expiration of tax credits, meaning the facility needed to be ready and available for use before the credit expired. This means that the eligibility rules are more lax today than they were when Senator Grassley helped create the PTC in 1992.

The Trump administration’s guidance was intended to limit the number of projects that would qualify for subsidies by ending their ability to game the system to elongate their eligibility window, and I think these changes achieve that.

• Thank you for being an Energy Bad Boys reader. We sincerely appreciate your continued support.

• Please like, share, and subscribe for more Bad content like this.

U.S. could lose 60 GW of solar if Trump’s “start of construction” rules tighten by PV Magazine.

Out With the Old by Doomberg

COMPLAINT OF THE CONCERNED COMMISSIONS AND REQUESTS FOR EXPEDITED ACTION AND FAST TRACK PROCESSING