Wind and Solar Projects Take a Tax Hit

 The renewable energy industry was reeling Friday over a move by the Trump administration to tighten tax rules for wind and solar projects.

New Treasury guidance details how projects can qualify for lucrative federal tax credits, which are set to expire starting next summer. The upshot: It’s harder than expected.

 

The administration eliminated a key method--spending on things like equipment orders--that developers have long used to lock in eligibility for tax credits.

 

Now, projects must begin "physical work of a significant nature."

 

Oliver Kerr, managing director for North America for Aurora Energy Research, said the rules are “worse than many in the industry had expected or hoped for.”

 

The U.S. is building around 29 gigawatts of wind and solar projects. “It will be challenging for a material number of additional projects to meet the new Physical Work Test requirements before June 2026,” Kerr said.

 

A July executive order said the guidance should prevent the “artificial acceleration or manipulation of eligibility.”

 

The tax credits had been part of former President Joe Biden’s landmark Inflation Reduction Act, and their sunset was one part of President Trump’s “one big beautiful bill,” which he signed July 4.

 

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