What the “One Big Beautiful Bill Act” means for the renewable energy industry, and how it can adapt

Over the July 4th holiday, President Trump signed H.R. 1 (a/k/a the “One Big Beautiful Bill”) into law (Public Law No: 119-21, the “Act”). This sweeping piece of legislation significantly rolls back clean energy tax credits established under the Inflation Reduction Act of 2022 and introduces meaningful complexity and uncertainty into the renewable energy tax credit landscape. However, the Act also creates short-term windows of opportunity for renewable energy industry participants who act fast.

There’s been no shortage of coverage breaking down timelines and statutory text. What developers and sponsors need now is practical guidance on how to move quickly, where the risks sit, and what might still change.

Here are five actions developers and sponsors can take now to protect their long-term interests, and what utilities and tax equity investors should expect for projects they anticipate investing in or acquiring.

1. Begin construction in 2025 if possible

While this is a difficult time to make business decisions, it is important to act now to preserve eligibility, manage risk, and stay ahead of coming regulatory shifts.

One of the most consequential changes in the Act is the phaseout of the clean electricity production credit under Section 45Y (“PTCs”) and the clean electricity investment credit under Section 48E (“ITCs”) for wind and solar facilities. Going forward, projects must either:

• Begin construction by July 4, 2026, or
• Be placed in service by December 31, 2027

… Or they won’t be eligible for those tax credits.

In practice, completing large-scale energy projects that do not begin construction before July 4th of next year prior to the December 31, 2027 deadline will likely be difficult. Under existing guidance, projects have a continuity safe harbor that allows them to qualify for PTCs or ITCs if they are placed in service before the end of the calendar year that is 4 years after the year in which construction began, such that projects that begin construction in 2025 must be placed in service in or before 2029 and projects that begin construction between January 1, 2026 and July 4, 2026 must be placed in service in or before 2030. To complicate matters further, a new Executive Order issued July 7th directs the Treasury Department to update its "beginning of construction" guidance, possibly making it stricter than the current guidance that the renewable energy industry has been relying on for over a decade. The Treasury Department is supposed to issue the guidance by Monday, August 18th, but meeting that deadline could be challenging.

While we expect industry participants to take steps to ensure that new projects begin construction as soon as possible to avoid the phaseout deadline, relying on industry norms under the existing beginning of construction guidance (e.g., placing transformer orders with accelerated component production timelines) may not be sufficient if the new guidance applies retroactively.

2. Lock in beginning of construction by December 31, 2025 to avoid FEOC exposure

A second, more complicated issue introduced by the Act is the enactment of new Foreign Entity of Concern (“FEOC”) restrictions. These rules come in two flavors:

• At the taxpayer level: If a project owner is a “prohibited foreign entity” (i.e., a “specified foreign entity” or a "foreign-influenced entity"), the taxpayer will be ineligible for the credits.
• At the project level: If the project receives "material assistance" from a prohibited foreign entity – which will be determined based on the percentage of certain project costs paid to a prohibited foreign entity – the project will not be eligible for tax credits.

The challenge for developers with global supply chains is that there is no guidance yet on the application of these rules, and the guidance (even in proposed form) may not be available before business decisions need to be made with respect to the FEOC rules. The definitions are vague and the percentage-based tests for “material assistance” are murky.

If construction is begun before December 31, 2025, the "material assistance" rules will not apply at the project level. If the December 31st cut off is missed, taxpayers will be at the mercy of guidance that could torpedo a project after its development is already underway.

3. Develop battery projects while the window is wide open

Amid all the disruption, battery storage projects came through largely unscathed by the changes in the Act, except that the FEOC rules described above will apply.

We’re already seeing developers accelerate battery project timelines to take advantage of this relative stability. If you’ve been considering standalone storage, now is the time to move.

4. Continue monetizing credits through familiar structures

Another piece of good news is that the Act did not affect the core tools used to monetize clean energy tax credits. The strategies we’ve been helping clients implement, including traditional tax equity structures (like partnership flips and sale-leasebacks), as well as the direct transfer option under Section 6418, remain fully available, except that transfers may not be made to prohibited foreign entities.

That means sponsors and tax equity investors can largely still turn credits into cash using the same market-tested structures as before.

5. Move fast, but manage the risks carefully

There is risk in moving quickly; especially when it means placing non-refundable deposits or starting work based on rules that may change. For example, if the Treasury Department tightens the beginning of construction rules to require a larger percentage payment or more extensive physical work, some early-stage strategies may no longer qualify.

What’s more, tax equity investors and strategic build-transfer purchasers typically don’t take construction or credit eligibility risk. That burden falls on developers. If the rules change after a down payment is made, it’s the developer, not the investor, who could be left with a project that does not qualify for the PTCs or ITCs.

In this environment, moving early is the right strategy; but it’s not a risk-free one. Renewable energy industry participants need to work closely with counsel to ensure documentation, contracts and construction activity all line up with current safe harbor practices.

Act now before the ground shifts

We’re in a moment where the incentives are clear, but the rules are shifting. Developers and sponsors have a narrow window, through the end of 2025, to lock in the beginning of construction under terms they understand. Beginning next year, the FEOC provisions apply and until the Treasury Department issues guidance, the requirements of the provisions, and practical ability to comply with them remain uncertain.

We’re advising clients to move fast, document carefully and avoid unnecessary exposure to future rulemaking wherever possible.