The Treasury Department tightened the rules Friday for renewable projects that can qualify for federal tax credits.
Renewable projects have historically been able to qualify for federal clean energy tax credits once a developer spent 5 percent of a project’s cost. But that threshold would be scrapped under new Treasury guidance.
The order comes after President Donald Trump ordered Treasury in July to tighten the definition for the start of construction, in an attempt to limit “market distorting subsidies for unreliable, foreign controlled energy sources.”
Under the new rules, developers would need to prove they had embarked on significant construction activities to qualify for the credits.
For a wind project, that could mean pouring a concrete pad for a foundation, according to the guidance. For solar, that could mean installation of racks that hold panels. Manufacturing of major project components would also qualify. Bloomberg News was first to report the guidance.
Treasury did not immediately respond to requests for comment.
The guidance comes after Congress overhauled the tax credits available to renewable projects in the One Big Beautiful Bill Act. Under the law, companies that start construction before July 4, 2026, are able to qualify for tax credits through the end of the decade.
The Treasury rules have been at the center of tug-of-war between Republican moderates and hardliners in recent months. Moderates like Sens. Lisa Murkowski of Alaska and John Curtis of Utah have argued that Treasury should continue to employ the traditional definition for the start of construction, while conservatives like Rep. Chip Roy of Texas have argued for a more stringent definition.
Renewable interests and environmentalists quickly lambasted the rule. The Solar Energy Industries Association called the rule a “blatant rejection of what Congress passed.”
“This is yet another act of energy subtraction from the Trump administration that will further delay the buildout of affordable, reliable power,” SEIA President and CEO Abigail Ross Hopper said in a statement.
Kit Kennedy, managing director for power at the Natural Resource Defense Council, said Congress had provided “a narrow but clear path” for clean energy projects to receive tax credits under Trump’s budget law.
“Ending these tax credits for wind and solar is going to drive up customers’ bills and hurt investment,” she said.
