Trump Administration unveils tougher rules on solar and wind subsidies
Trump's administration will likely take another step to curb the growth of renewable energies in the United States as early as Monday by making it more difficult for companies to claim federal subsidies for wind and sun energy.
The Treasury Department will meet a deadline of 45 days, set in July by U.S. president Donald Trump, to revise the rules that govern who is eligible for tax credits on clean energy, which are being phased out earlier than expected under Republicans' One Big Beautiful Bill Act.
The rule is based on what it means to consider a project under construction. This definition is crucial for companies that are building complex facilities that take years to plan.
OBBBA stipulates that projects must begin construction or enter service before the end of the year 2027 in order to qualify for 30% tax credits and bonuses, which can increase the subsidy. The credits were previously available until 2032.
Trump instructed Treasury in an executive order issued last month three days after signing OBBBA as law to limit the use of "safe harbors", rules that allowed project owners to claim tax credit for years, so long they incurred 5% of costs or made meaningful physical progress prior to the expiration of the credit.
Capstone, a Washington-based policy consultancy firm, said Treasury could require developers to pay a higher percentage cost such as 10% or 15 percent. The agency could exclude offsite construction, or require greater contact with government officials and proof of continual work.
The Treasury Department has not responded to a comment request. The administration's latest move to slow down the development of solar and wind energy is to tighten the requirements. Trump claims that these technologies are unreliable and expensive and rely on Chinese supply chains.
According to Clean Energy Associates, if "beginning construction" regulations are tightened up until 2030, the United States may lose 60 gigawatts in planned solar capacity. This would be enough to power approximately 10 million homes.
Over the past decade, project developers and financiers have relied on tax credit rules as a guide to their construction and investment decisions.
Reagan Farr is the CEO of Silicon Ranch, a solar project developer. "The executive orders and the uncertainty have actually had a greater negative impact than legislation itself," he said. Javad Asghari is a partner at the Simpson Thacher law firm who specializes in energy and infrastructure projects. He said that some companies have slowed down their progress while others have increased activity to begin as many projects.
Aaron Halimi is the founder and president Renewable Properties in San Francisco. He described steps taken by his company to ensure that it has access to government subsidies, which he believes could be threatened.
Halimi stated that "we've taken many measures to secure a large part of our pipeline of project we plan to deliver from now until the end of 2029", including purchasing transformers and American made panels and increasing credit lines for equipment purchases. (Reporting and editing by Rod Nickel.)
(source: Reuters)
