President Donald Trump issued an executive order instructing the Department of Treasury to tighten restrictions on solar and wind tax credits, further clamping down on regulatory support that was cut in the “One Big, Beautiful Bill Act.”
Under the OBBBA cuts to tax credits, projects that began construction within 12 months of enactment, or were “placed in service” by 2028, are eligible for the 45Y Production Tax Credit (PTC) or the 48E Investment Tax Credit (ITC). Such projects would be eligible for the credits under a safe harbor provision.
However, the executive order directs the Treasury to restrict safe harboring of projects, tightening interpretation of the “beginning of construction” language. The order requires that a “substantial portion” of a project must be built to secure credits. The order requires the Treasury to enforce this within 45 days of the enactment of the congressional budget bill.
“For years, developers and investors have relied on these rules to qualify projects under the ITC/PTC framework, even when [commercial operation date] occurs years later,” said Peter DeFazio, managing partner, Greenprint Capital. “If interpreted narrowly, projects that haven’t meaningfully advanced beyond paper progress—even with a 5% basis spend—could lose eligibility.”
DeFazio said if the application of this stricter interpretation is retroactive, the fallout would ripple across billions in project pipeline capital.
“Now is the time to review safe harbor assumptions, revisit NTP timelines, and assess whether your portfolio could be exposed,” said DeFazio.
The order also requires that Treasury implements restrictions on projects and products based on the “enhanced Foreign Entity of Concern (FEOC) restrictions” from the budget bill. FEOC restrictions limit tax credit eligibility for projects that are owned by entities from, or connected to, China, Russia, Iran and North Korea. Projects are in violation of FEOC rules if they have direct or indirect interest of 50% or more from these “Specified Foreign Entities.”
The order also applies FEOC restrictions to “Foreign-Influenced Entities” which are entities “influenced” by Specified Foreign Entities (SFE). Influence is determined by an entity’s right to assign a board member or executive officer, by showing at least 25% ownership from an SFE, collective ownership of at least 40% from multiple SFE, or an AFE holding at least 15% of debt in the entity.
“Reliance on so-called ‘green’ subsidies threatens national security by making the United States dependent on supply chains controlled by foreign adversaries,” said a fact sheet from the White House.
The executive order further instructs the Department of the Interior within 45 days to conduct a review of regulations, guidance, policies and practices to determine whether it applies “preferential treatment” to wind and solar facilities in comparison to dispatchable energy sources. If such “preferential treatment” is found, it instructs the Department to eliminate such provisions.
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