The Trump administration has introduced new restrictions that could make it significantly harder for larger wind and solar developers to qualify for federal tax credits, posing another barrier to the expansion of clean, renewable energy sources in the United States. 

What's happening?

Guidance from the Treasury Department released in August eliminated a key pathway that developers have used for decades to prove their projects have started construction, according to recent reporting from Canary Media.

Under the new rules, larger renewable energy developments can no longer use the simple method of spending 5 percent of total project costs to qualify for tax credits. Instead, they must demonstrate ongoing "physical work of a significant nature."

The change, taking effect this September, is set to impact most community solar farms and utility-scale renewable projects, while residential solar installations will remain unaffected.

Clean energy developers now have until just July 2026 to commence construction under these stricter requirements. The previous deadline was set at 2032. 

Why are the new restrictions concerning?

This new barrier could threaten community access to affordable, renewable electricity at a time when power demand continues to surge. "Solar, batteries, and wind made up 96 percent of new capacity added to U.S. grids" in 2024, according to Canary Media, representing the primary option for meeting growing energy needs.

Some outlets, such as the San Antonio Express-News, suggested that developers may have been somewhat relieved by the new guidance, having expected more immediate cuts. But Supratim Srinivasan, the co-founder and chief executive officer of Texas-based solar company Atma Energy, told the same paper, "It makes it really hard for traditional, successful developers and financial institutions to back renewable projects."

The restrictions come on top of other recent challenges to federal funding for clean energy.

"This is yet another act of energy subtraction from the Trump administration that will further delay the buildout of affordable, reliable power," Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, said in a statement per Canary.

Families and businesses across the country depend on these energy sources to keep electricity bills manageable. When renewable energy development slows, it limits competition in energy markets and can drive up costs for anyone paying an electricity bill. 

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What's being done?

Several states are working to streamline the permitting process to help developers meet the new deadline of next summer. The hope is that many will be able to quickly adapt to the shortened timeline and begin construction by then.

Some Senate Republicans reportedly pushed back against more severe versions of the tax credit rules, showing a measure of bipartisan support for the progress of these projects as Democrats continue to criticize clean energy funding cuts resulting from the One Big Beautiful Bill.

Meanwhile, communities can still support renewable energy expansion through local solar programs, energy-efficient home upgrades, and advocating for policies that prioritize affordable energy access.

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