Trump administration tax guidance is raising new questions about the future of the clean energy sector, which is already grappling with deep cuts in federal spending.
The Treasury Department plan, released last week, aims to fill in gaps from Republicans’ One Big Beautiful Bill Act on restricting use of Chinese components in U.S. projects. But the new “foreign entity of concern” interim guidance didn’t address some of the most contentious issues about how companies must comply with supply chain rules, adding to uncertainty for renewable and battery projects.
“Solar manufacturers, investors, and developers need clarity and certainty to keep capital flowing into America’s energy economy. This limited guidance leaves critical questions unanswered, and without more clarity, investors will remain hesitant to deploy capital at the scale needed to meet America’s growing energy demand,” said Sean Gallagher, senior vice president Policy at the Solar Energy Industries Association.
Under the megalaw, solar, wind and battery developers wanting to tap clean electricity or advanced manufacturing tax credits are required as of this year to ensure that a percentage of components in their products aren’t tied to U.S. adversaries like China, North Korea, Russia and Iran. Projects that violate the rules could face costly penalties and raise risks for lending banks.
