Tax credit 4 July deadline looms as US wind developers brace for more federal roadblocks
US President Donald Trump continues to frustrate wind farm development as the 4 July cut-off for claiming tax credits looms
Under President Donald Trump's One Big Beautiful Bill Act (OBBBA), wind projects must have started construction by 4 July and be completed within four calendar years to keep the federal credits. If developers miss the construction deadline, the projects must instead be commissioned by the end of 2027 – a tight schedule. In the US, tax credits substantially reduce a project owner’s tax bill.
“There’s a near-term peak in installations this year,” said Harrison Sholler, a wind analyst at BloombergNEF. “It’s a little elevated next year too, then there’s a pretty sharp decline in 2028 as the market struggles to adjust to a post-tax-credit world.”
After the OBBBA was signed into law, on 4 July 2025, there was a huge rush of wind projects being ‘safe-harboured’, or deemed eligible for tax credits, Wood Mackenzie’s North American wind analyst, Diego Espinosa, said.
In a May report, he estimated that about 16GW of onshore wind projects had been safe-harboured to meet the expiry of the federal tax credits.
“Including onshore wind projects under advanced development, permitting and contracting, safe-harboured capacity could jump another 7GW, to 23GW,” the research consultancy said in a report. For offshore projects, 6GW of projects were safe-harboured and already being built, Espinosa noted in the report.
Court ruling
In early June, a federal judge had scrapped an anti-renewables Trump administration bid to limit the start of construction rule for tax credits for wind and solar. District of Columbia judge Colleen Kollar-Kotelly ruled that the treasury department’s removal of a long-used 5% capital investment definition – for a project to be deemed to be under construction – was “arbitrary and capricious”. Otherwise, to qualify for tax credits, projects must be deemed to be in continuous construction.
“We think the court decision is too late to enable a new wave of projects able to meet the July 4 deadline,” said BloombergNEF’s Sholler. “It is also risky for developers to rely on the ruling as we expect the Trump administration to challenge it. If the ruling holds, the biggest impact is likely legal, as it gives developers another path to ensure tax credit eligibility where physical-work evidence may be ambiguous.”
Sholler cites the OBBBA and 3.6GW SunZia project in New Mexico, which was recently commissioned, as boosting onshore wind installations to an estimated 9.2GW this year. Installations are forecast to taper off to 8.4GW in 2027, 6.1GW in 2028 and then a significantly lower 4.3GW in 2029. New projects had totalled 5.3GW in 2024 and 6.4GW in 2025, according to BloombergNEF.
The 3.6GW SunZia wind farm was commissioned in June (pic credit: Pattern Energy)
Wood Mackenzie's latest quarterly outlook forecasts onshore and offshore US wind installations of 11GW in 2026, 13.4GW in 2027, and 8.1GW in both 2028 and 2029.
Even so, after 4 July, “it’s a big area of uncertainty for the industry,” said Sholler. There will be rising power demand, primarily because of a fast increase of power-hungry data centres, but it’s also unclear how willing offtakers will be to absorb higher wind power prices without tax credits, he said.
The dollar value of power purchase agreements may have to rise, although prices of wind equipment are expected to fall because of lower demand once the tax credits have been phased out, he said.
However, the situation is not new for wind. The industry is well-used to tax credits being ended and then reinstated over the past few decades, stressed a wind expert who preferred to remain anonymous. Indeed, the Biden-era Inflation Reduction Act of 2022 had only reinstated federal wind tax credits for ten years, which was overturned by OBBBA.
The data centre effect
In 2030 to 2036, data centre demand will boost installations to 58GW, with 11GW alone in 2036. “We see this as a huge boost to the wind sector,” said Sholler. “Wind’s pretty competitive with other technologies” even without tax credits, added Espinosa. “Everyone’s looking for power, and wind can deliver. It will be pricier but still appealing to hyperscalers,” or huge big-tech data centres. [Quite the rosy assessment here from Bloomberg’s New Energy Finance (NEF). They have a lot to lose under a more sober assessment. The wind industry and its acolytes continue to pretend that the intermittency and unreliability of wind power are not a major drawback for high tech industries that demand uncompromised performance. ]
Right now, the supply chain is not the main bottleneck as the industry approaches the ‘4 July cliff’ and the next four years, said Sholler. The problem lies with federal permitting – under an anti-wind Trump administration – and interconnection, a long-standing problem.
A significant number of wind projects are impacted by the virtual freeze on the US Department of Defence and the Federal Aviation Agency granting ‘determinations of no hazard’, an approval mandatory for wind farm permitting. This freeze is being challenged in court. Oral arguments are expected on 4 August and a ruling two to six weeks later, said the anonymous wind expert. Sentiment in the industry about the lawsuit is pretty positive, noted Espinosa. He cited successes in court overturning Trump’s ‘wind ban’ and stop-work orders on offshore projects.
Trump’s recent and complex 'foreign entities of concern' limit on imported project components – which takes away tax credits from projects using equipment imported from China, or from developers with financial relationships with companies linked to China – means little for wind projects, said Sholler. Few major components are sourced from China these days and instead are imported from India, Mexico and Canada.
The industry is keen to have a long-term mature tax landscape for wind projects that is not subject to a political pendulum swinging back and forth, and which is currently swinging more forcefully, said the anonymous wind expert. [In other words, “we need the tax credits to be permanent.” Industries hooked on subsidies don’t give up easily.]
Trump leaves office in January 2029 – he cannot run for the presidency again – and although there are currently moves in Congress to pass legislation that would reinstate wind and solar tax credits, the bills are not expected to become law even if the Democrats win control of one or both houses of Congress. There remains opposition, and the virulently anti-wind Trump would be expected to veto any such bill.
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