Projects can maintain tax credit eligibility if 5% of total capital expenditure is incurred before legislative changes take effect, said solar tracker provider PV Hardware.
The renewable energy industry currently faces a potential repeal of tax credits as part of the “Big, Beautiful Bill” which narrowly passed the House of Representatives and now heads to the Senate for approval.
If approved, the new budget would effectively eliminate tax credits for all renewable energy projects not placed in service by 2028.
Utility-scale solar projects often take years to progress from early development to construction and activation, and equipment providers are sounding the alarm to secure tax-credit eligible components before the budget is passed.
Under current Internal Revenue Service regulations, projects can maintain eligibility for tax credits by demonstrating that at least 5% of the project’s total capital expenditures were incurred before new legislative changes take effect.
“Time is of the essence,” said Rodolfo Bitar, VP of business development for PV Hardware USA, a solar tracker provider.
Two critical project-level tax credits created by the Inflation Reduction Act will be repealed if the budget passes the Senate as currently written. This includes the Investment Tax Credit (ITC) and the Production Tax Credit (PTC).
The ITC is a project-level credit that covers 30% of the cost of an installed project. This credit is offered to projects of any size, from utility-scale power plants to homeowners and small businesses installing solar on their rooftops.
The PTC is a generation-side tax credit, crediting emissions-free electricity generators generally between 0.3 cents per kWh to 1.5 cents per kWh.
PV Hardware said it is ready to support solar tracker procurement before the legislative changes take effect. The company said it has over 5 GW of safe harbor product that can help developers meet the capital expenditure requirements to qualify for the tax credits.
“We are committed to supporting our partners during this period of policy transition by enabling them to take immediate steps to safeguard their projects’ economics,” said Bitar. “We are encouraging developers to reach out now to explore Safe Harbor opportunities before the window of opportunity closes.”
The budget bill is expected to have devastating effects on the renewable energy industry if passed as-is. The Solar Energy Industries Association (SEIA) said the bill could jeopardize nearly 300 U.S.-based solar and storage factories and lead to the loss of 145,000 GWh of solar generation by 2030.
“If Congress does not change course, this legislation will upend an economic boom in this country that has delivered an historic American manufacturing renaissance, lower electric bills, hundreds of thousands of good-paying jobs, and tens of billions of dollars of investments primarily to states that voted for President Trump,” said Abigail Ross Hopper, president and chief executive officer, SEIA.
