Wind, solar projects face additional scrutiny under executive order

On the heels of newly accelerated terminations of clean energy tax credits, President Donald Trump signed an executive order July 7 that could cause further challenges for wind and solar energy producers.

Republicans’ new tax law, commonly known as the One Big Beautiful Bill Act (P.L. 119-21) and signed into law July 4, amended the expiration dates for almost all the renewable energy tax credits implemented by Democrats in 2022’s Inflation Reduction Act – but the production (Section 45Y) and investment (Section 48E) credits for wind and solar facilities were the subject of some tug of war.

Before passage of the new law, these technology-neutral credits were available for electricity produced or investment in qualified facilities placed in service after Dec. 31, 2024, with a multi-year phaseout set to begin either after 2032 or when U.S. greenhouse gas emissions from electricity reached 25% of those in 2022.

In the bill originally passed by the House this May, both Section 45Y and 48E credits generally would have been repealed outright for projects on which construction began more than 60 days after enactment of the bill, or for those on which construction began within 60 days but which were not placed in service by the end of the 2028. Proposed changes from the Senate Finance Committee would have delayed the termination date and removed begin-construction restrictions for most technologies but would have phased out the credits specifically for wind and solar facilities by 2028. Under the final bill, the credits will be terminated for wind and solar facilities placed in service after Dec. 31, 2027, unless construction begins less than one year after enactment (i.e., before July 4, 2026).

This final version drew the ire of House members who wanted to see a more rapid end to credits for wind and solar and was one of the final sticking points for some members of the ultra-conservative House Freedom Caucus (HFC). Further changes were not made after the bill left the Senate, and nearly all House Republicans voted in support at the end — but last-minute discussions between HFC members and Trump appear to have led to an executive order advising Treasury Secretary Scott Bessent to “take all action… to strictly enforce the termination” of the credits for wind and solar facilities.

The president’s order specifically directs the treasury secretary to consider issuing new and revised guidance to ensure claimants are not able to circumvent policies related to “beginning of construction” definitions, including through the use of “artificial acceleration or manipulation of eligibility,” and it endorses restricting the use of “broad safe harbors unless a substantial portion of a subject facility has been built.” This opens the question of whether the administration will seek to revise the criteria for a project to qualify as under construction, first issued in 2013.

Under current guidance, a developer can establish that construction has begun under one of two methods. They can either show that they have started significant physical work (which can be either on-site or off-site and can be performed by a contractor or subcontractor if done under a binding contract in place before the physical work begins), or they can use a safe harbor if they have paid or incurred at least 5% of the total project cost. In both cases, the taxpayer must also demonstrate “continuous construction” by finishing the project within four years.

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