By Matt Davis | September 9, 2025
Breaking down the OBBBA: What’s new and what’s not?
When the alliteratively (or is it absurdly?) named “One Big Beautiful Bill Act” was signed into law on July 4, 2025, the U.S. renewable energy industry got a mix of holiday fireworks and a new set of calendars to track. For clean energy developers and investors, the new law means big changes to the tax credits that have provided significant value to solar and wind projects for the past few decades.
As the bill wound its way through multiple rounds of edits and congressional dealmaking, it seemed that new provisions were being added or eliminated each day. Even after it was passed, a great deal of uncertainty remained to be clarified by Treasury with respect to the Trump administration’s targeted changes to critical start-of-construction rules. For many (Pivotal180 trainers included), it was difficult to keep track of what was – and wasn’t – in the bill, and just what exactly would be changing.
Now that the dust has (mostly) settled, let’s break down what’s new and what’s not in the new bill.
What’s new: Eligibility deadlines and FEOC rules
The OBBBA changes with the biggest impact on clean energy are those related to tax credits. Those primarily fall into two categories: new eligibility deadlines and FEOC rules.
On the timeline front, the deadlines for solar and wind projects to qualify for tax credits — the new, technology-neutral versions of the ITC and PTC – have been significantly shortened. The Inflation Reduction Act (IRA), passed in 2022, had previously extended credit eligibility for solar and wind for a decade or more, likely into the mid-2030s or longer depending on meeting greenhouse gas reduction targets. The extension of credits which had repeatedly been at risk of expiring seemed to provide some confidence in their long-term availability to investors.
Not anymore. In order to qualify for tax credits under OBBBA, solar and wind projects must either begin construction (more on that term next) by July 4, 2026 (one year from the date the bill was passed) or be placed in service by the end of 2027. Projects that meet that first deadline still benefit from the existing four-year window to complete, providing runway through mid-2030.
What’s more, developers had long had two paths to prove a project started construction under Treasury rules:
- Undertake physical work of a significant nature (like foundations or roads), or
- Spend at least 5% of project costs (the “safe harbor” threshold).
But following a Trump executive order, Treasury revised the rules, largely closing the second path. The 5% safe harbor survives only for small solar projects under 1.5 MW-AC. For everyone else— utility-scale solar and wind — it’s all about physical work.
The new law also introduces the Foreign Entity of Concern (FEOC) restrictions. These are aimed squarely at reducing reliance on Chinese — and certain other — equipment and financing. Projects that use too much FEOC-linked material risk losing their eligibility for credits altogether. Only projects that begin construction by the end of 2025 are exempt from FEOC rules, leaving very little time to get ahead of an increasingly complex compliance environment.
What remains: Credit structure, transferability, MACRS and more
Despite the bad news, there are some silver linings.
While the FEOC rules apply to all technologies, the shortened tax credit eligibility deadlines are only for solar and wind. Battery projects and other low- or zero-carbon technologies that qualified for tax credits under the IRA will continue to do so on their existing timelines well into the next decade. As data center and AI growth drive increased electricity demand and fewer solar and wind projects are built due to their tax credits expiring, battery developers will be particularly well-positioned to take advantage of the increased energy price volatility that will likely result – plus they get still get their credits!
The structure of clean energy tax credits also remains in place, including the valuable adders created under the IRA. Projects qualifying for the new technology-neutral credits – whether solar or wind deals that meet the deadlines above, or other tech that qualifies beyond those deadlines – can continue to earn 10% adders for meeting Domestic Content and/or Energy Communities requirements. Those legacies of the IRA will continue to support the growth of low-carbon energy for years to come.
Another IRA change that survived the new bill is transferability. The ability to transfer, or sell, tax credits for cash was a massive boon to developers unable to secure tax equity. While solar and wind projects won’t qualify for credits as long as expected, those that do can still opt to monetize their credits via the increasingly robust transfer market. Between solar and wind projects that meet start of construction requirements and other technologies that continue to qualify for credits, both the tax equity and tax credit transfer markets promise to remain busy for years to come.
Lastly, while tax credits for some projects may be on the way out, another tax benefit remains in place for all clean energy tech: 5-year MACRS depreciation. Despite much talk of repeal during negotiations, the highly accelerated depreciation schedule which may provide ~10-25% of the total tax benefits for many projects remains available to solar, wind, battery and other low carbon technologies. 100% bonus depreciation was also restored for project owners with the tax capacity to take advantage of it.
What never changes: the need for great financial models!
Want to learn to build a best practice financial model to help you and your business understand, evaluate and optimize your projects, with or without tax credits? Enroll in a Pivotal180 course! We offer a range of training programs for modelers of different backgrounds and experience levels:
- Renewable Energy Project Finance Modeling
- Infrastructure & Project Finance Modeling
- Introduction to Project Finance Modeling
- Advanced Project Finance Debt Modeling
While tax laws may be changing, tax equity is likely to continue to be a critical part of renewable energy financing for years to come. Master the secrets of one of project finance’s most challenging topics with Pivotal180:
Come model with us!
