An upcoming decision from the Treasury Department has clean energy boosters and industry allies preparing for a potential disruption in the nation’s electricity supply.
Just days after signing the One Big Beautiful Bill Act on July 4, President Donald Trump announced an executive order to end “market distorting subsidies for unreliable, foreign controlled energy sources.”
The order says wind and solar energy crowds out “affordable, reliable, dispatchable domestic energy sources, compromises our electric grid, and denigrates the beauty of our Nation’s natural landscape.” It calls on Treasury Secretary Scott Bessent to issue new guidance to restrict the “use of broad safe harbors unless a substantial portion of a subject facility has been built.”
The guidance, which is expected as soon as Monday, is sparking a lobbying rush from a range of concerned stakeholders, including Republicans on Capitol Hill, utilities, data center developers and major Wall Street firms that want to underwrite big, new infrastructure investments.
Those groups are worried that the new Treasury guidance will make it more challenging to qualify for tax credits based on a “beginning of construction” metric that has been practiced for years. Under current rules, projects qualify for credits if developers start on-site physical work or purchase equipment that is at least 5 percent of the total price tag of the project.
Joey Paolino, a senior policy principal with Advanced Energy United, said the clean energy group is working to spread the message that if stringent new rules are put in place, power is going to get more expensive and states could lose economic investment.
“When you cut off supply, and it seems like the guidance is moving in that direction for wind and solar, the effect is that prices will go up,” Paolino said.
A separate clean energy executive, who was granted anonymity to speak freely about the lobbying push, said there could be an “economy-wide impact.”
“I think that’s something that banks are keen to avoid,” the executive said. “Private financial firms are standing up. The utilities are flagging concerns with the administration, saying that there are problems with projects that they have [power purchase agreements] for.”
Power purchase agreements, or PPAs, are long contracts for electricity supply. Current rules on qualification were spelled out by the Internal Revenue Service in 2013.
The coming revisions do not have a public comment period. That means industry groups are working directly with the administration and with allies in Congress to relay their message.
The Edison Electric Institute, which represents investor-owned utilities, said that it had worked with lawmakers and the administration on the megalaw and that all parties have been “very public about the need to build out energy infrastructure for data centers and AI — and to keeping costs as low as possible for customers.”
Through a spokesperson, the group said that it expects gas to be “dominant” in the power sector, but that renewables will be “critical to meeting energy dominance goals, particularly at the lowest cost to customers.”
“Our concern is that our member companies, which are operating under a normal regulatory framework and have already made substantial investments in these projects, could potentially no longer qualify for tax credits if updated Treasury guidance sets a significantly different threshold for defining the beginning of construction,” the spokesperson said in an email.
The Data Center Coalition, which represents tech hyperscalers and companies building data centers, is also urging the administration to enact a rule “consistent with the intent of OBBB,” an official with the group said. That includes a “unified, technology-neutral approach” that does not subject wind and solar power to “more restrictive or ambiguous eligibility frameworks” than other clean sources like nuclear or geothermal.
The coalition is also emphasizing to the Treasury Department that in order to grow the country’s AI capability, it needs technology to meet electricity demand quickly. “Any regulatory friction that slows down deployment of new generation today directly impacts our ability to meet AI-era electricity demands tomorrow,” the official said.
A letter dated Thursday from the Information Technology Industry Council, which represents technology hardware and software companies, similarly said that meeting the energy needs of the country’s “significant industrial resurgence” will require “the rapid deployment of energy projects already in development.”
“Delays or regulatory uncertainty could undermine efforts to power high-growth sectors such as advanced manufacturing and AI, and strain regional grid reliability,” wrote Lara Muldoon, ITIC’s vice president of government affairs.
The administration has made the AI buildout a priority. An action plan released last month included a call for a “comprehensive strategy to enhance and expand the power grid” and was paired with an executive order reducing permitting requirements for data centers and associated power generation. The White House, however, has prioritized fossil fuels and more ambitious power sources like nuclear power for AI, even as tech firms lean on wind and solar to get facilities on the grid quickly.
The American Investment Council, an association representing Goldman Sachs and other investment firms, did not respond for comment. The Clean Energy Buyers Association, a group that represents Amazon, Google, General Motors and other major U.S. companies, and the National Association of Manufacturers, which has previously said clean energy can support factories and economic development, both declined to comment.
More trouble for renewables
The looming Treasury guidance is just part of a full-court Trump administration press to boost fossil fuels and disrupt renewable energy. Last week, EPA canceled $7 billion in solar grants, just after proposing to scrap the legal foundation for regulation of greenhouse gases as pollutants. The Department of Interior is also complicating wind and solar projects with strict new permitting rules.
The lobbying push is also coming from Senate Republicans who negotiated the OBBB. Sens. Chuck Grassley of Iowa and John Curtis of Utah are holding up confirmation processes for Treasury Department nominees. The executive order has also rankled Sen. Lisa Murkowski (R-Alaska) and other Republicans. That Senate pressure is getting its own blowback from House Freedom Caucus members like Rep. Chip Roy (R-Texas).
Some tax lawyers say that a Treasury move to substantially change how projects qualify for tax credits could be legally vulnerable in court.
“The on-site physical work test for ‘beginning of construction’ has been around for a long time, even preceding renewable energy projects, and it most likely could not be modified in a substantial way for general renewable energy credit qualification purposes in a way that is legal,” said Aaron Mitchell, a Houston-based energy tax lawyer, in an interview.
He added: “The ‘beginning of construction’ is a very important concept in project finance that is meant to bring predictability to project financing — it serves to ‘lock in’ the tax credit rules that a project will be analyzed under.”
The clean energy executive said that “it’s harder for Treasury to legislate” new rules around credit qualification following the Loper Bright Enterprises v. Raimondo Supreme Court decision last year that overturned the long-standing legal doctrine that gave agencies authority to interpret laws passed by Congress.
Meanwhile, an Aug. 8 report from the consultancy Capstone says “an array of legal and political risks will lead the Treasury Department to take a restrained approach” on the credits.
“We believe revised guidance from the Treasury Department will not be a worst-case scenario for wind and solar and will result in a modest modification of the beginning of construction rules,” the report said.
Some nonrenewable players also reached out to Treasury.
In a letter, the Carbon Capture Coalition wrote to Bessent and said any changes to “underlying harbor rules may have significant and immediate implications” for the 45Q credit: a key incentive for carbon capture and storage. The group backs policies that support greater deployment of the technology.
Changes to wind and solar guidance could have repercussions for other tax credits depending on what Treasury does, said Jessie Stolark, the coalition’s executive director.
Agencies can’t “take actions that are ‘arbitrary and capricious,’ and so making changes and differentiations between tax credits that have similar guidance would have to be justified,” Stolark continued.
To meet the stipulations of the executive order and also be legally compliant, whatever changes Treasury would make to “beginning of construction would have to be, essentially, harmonized across various tax credits.”
The uncertainty has left some in the clean energy industry looking to the state level for more opportunities. AEU’s Paolino said the group is communicating with governors of both parties to share strategies for how they can grow clean energy in their states.
“You can’t just replace the tax credits, there’s not going to be a one-for-one swap with HR1,” Paolino said. “But we can get creative on technology on the supply side or policies on the demand side that can expand clean energy and help keep homeowners’ rates down.”
