Treasury Department sets limits on remaining wind and solar tax credits
The Treasury Department issued guidance Friday that narrows which wind and solar energy projects can receive the remaining tax credits that were largely eliminated under the Republicans' “big, beautiful bill.”
The legislation passed by Republicans last month axes the credits for projects that don’t begin producing electricity by 2028.
However, it contains an exemption for projects that begin construction over the next year. Under the law, those projects would remain eligible for the subsidies even if they don’t produce electricity under the specified time frame.
The Trump administration’s new guidance, however, sets further restrictions on which projects are considered having begun construction.
It says that construction of these projects must be “continuous." It also defines "having begun construction" as having done “physical work of a significant nature.” This includes activities like manufacturing equipment and excavating land to begin placing equipment in it. But it excludes activities like only having done surveys, test drilling or excavation for purposes of altering the landscape.
The guidance also says that even if the project meets those other requirements, it still must produce electricity by the end of the fourth calendar year after it begins construction.
The renewable energy industry criticized the guidance, saying it would slow the buildup of low-carbon energy sources.
“This is yet another act of energy subtraction from the Trump administration that will further delay the buildout of affordable, reliable power. American families and businesses will pay more for electricity as a result of this action, and China will continue to outpace us in the race for electricity to power AI [artificial intelligence],” Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, said in a written statement.
Climate advocates hurled similar criticisms.
"The Trump administration’s new tax credit guidance represents yet another senseless attack on clean energy that will drive up electricity costs, make our energy grid less reliable, harm our economy and lead to more deaths and disease from harmful air pollution. The guidance places significant new obstacles on solar and wind projects,” Vickie Patton, general counsel at the Environmental Defense Fund, said in a written statement.
The maneuvers come after disagreements between moderate and conservative Republicans over how rapidly to eliminate the credits. President Trump apparently told House Freedom Caucus members he would further restrict the tax credits if they supported his bill.
After it passed, he issued an executive order telling the Treasury Department to take a strict approach to limit the tax incentives.
Trump has also in recent weeks used other policies to go after renewables, including efforts to slow federal approvals of wind and solar projects.
Even before it came out, Sens. Chuck Grassley (R-Iowa) and John Curtis (R-Utah), who are more supportive of renewables than many of their GOP colleagues, raised concerns about the Treasury Department guidance.