"Big Beautiful Bill" Reshapes Commercial Solar Landscape with New Deadlines and Restrictions.
Jul 11
The "One Big, Beautiful Bill Act" (OBBBA), signed into law on July 4, 2025, has introduced a significant shift in the federal government's support for the commercial solar industry. While the bill does not eliminate key tax credits for commercial projects outright, it imposes stringent new deadlines and restrictions, creating a "timeline crunch" for developers and reshaping the financial viability of future projects.
At the heart of the legislation's impact on commercial solar are the changes to the Investment Tax Credit (ITC) under Section 48E and the Production Tax Credit (PTC) under Section 45Y. Unlike the residential solar tax credit, which is set to expire at the end of 2025, the commercial credits remain but are now governed by a tight schedule.
To qualify for the full tax benefits, commercial solar projects must meet one of two critical deadlines:
Begin Construction by July 4, 2026: Projects that commence construction by this date will benefit from a four-year "safe harbor," allowing them a longer window to be completed and placed in service.
Placed in Service by December 31, 2027: For projects that do not meet the 2026 construction start deadline, they must be fully operational by the end of 2027 to receive any tax credit.
This compressed timeline is forcing a rapid acceleration of project development across the country as companies race to secure their eligibility for the valuable tax incentives.
Adding another layer of complexity, the OBBBA introduces new "Foreign Entity of Concern" (FEOC) restrictions, primarily aimed at limiting the use of solar components from Chinese manufacturers.3 Starting in 2026, commercial solar projects will be required to meet specific domestic content thresholds to qualify for tax credits. These thresholds will increase incrementally in the following years, putting pressure on the solar supply chain and potentially increasing project costs.
Industry experts anticipate that these changes will lead to a more competitive and consolidated market. Capital is expected to flow towards states with robust local and state-level incentives that can help offset the reduced federal support.
A notable silver lining in the bill for the clean energy sector is the treatment of standalone energy storage projects. These projects are exempt from the accelerated phase-out of tax credits and will continue to qualify for the federal ITC, making them an increasingly attractive investment for developers and investors.
Furthermore, the legislation permanently restores 100% bonus depreciation for qualified property, including renewable energy projects, that are acquired and placed in service after January 19, 2025. This provision offers a significant tax benefit that can help improve the financial returns for new solar installations.
In summary, while the "big beautiful bill" presents considerable challenges to the commercial solar industry by tightening timelines and introducing new sourcing requirements, it also creates opportunities for well-positioned developers and underscores the growing importance of state-level clean energy policies. The coming months are expected to see a flurry of activity as the industry adapts to this new regulatory landscape.
