Following the tightened tax credit eligibility laws outlined in the One Big Beautiful Bill Act, municipalities and communities that are sticking to renewable energy goals are under pressure to accelerate project timelines.
Trenton Allen, whose company Sustainable Capital Advisors works to provide sustainable finance for clean energy developers, alongside other activities, sees a market ready to make the most of what’s left in the short term.
He explained that many municipal clients are now prioritizing projects to ensure they can fully leverage the federal incentives, such as the investment tax credits (ITCs) for projects in the residential and commercial sectors, which are now being removed earlier than planned. Developers are moving quickly through their procurement processes to identify and prioritize projects that are most likely to be completed within the required timeframe to secure maximum incentives.
“Prioritization is incredibly important because it allows developers to focus on projects that have the best chance to get done,” said Allen. “Other projects, they’re moving to the back burner, though these are still nice to have. There really is a prioritization that we’re seeing happening with many of our clients as they try to hit these windows to maximize the incentives that are available from these projects.”
Capital markets appear ready to support a high volume of projects on an accelerated timeline through commercial banks, community banks, and community development financial institutions (CDFIs). Allen said he foresees an uptick in green bonds and other municipal finance projects, as school districts and city governments seek to utilize their own credit to fund these initiatives.
“There’s a great opportunity available here in the short run,” said Allen. “Being able to meet this moment and to accelerate as much of these projects as we possibly can is incredibly important and will strengthen our overall energy system.”
Community solar
In August, the Environmental Protection Agency (EPA) announced plans to claw back all $7 billion of grants that were made available through the Solar For All program. There is likely to be ongoing litigation to decide the fate of these funds, and for now uncertainty clouds the outcome.
Solar For All provided grant funds primarily for community solar projects across the United States. Community solar offers a pathway for residents to access low-cost solar energy without having to invest in an on-site project.
Allen highlighted a successful community solar program in Washington, DC, which has significantly reduced household energy bills, by more than 50% in some cases. These savings provide real cash flow to households.
Beyond help for households struggling with their energy bills, these projects create local economic opportunities through jobs in construction and ongoing operations and maintenance. Here, Allen sees the need for policymakers to ensure a stable market that provides greater certainty to businesses investing in the projects. This is crucial in allowing them to take a long-term view on hiring and other investments – creating a market, not just a one-off project.
State support
As support for renewable energy is being phased out from the federal government’s plans, Allen sees both an opportunity and a responsibility for states to step in and fill this role.
He cited New York as a successful example, highlighting how the New York State Energy Research and Development Authority (NYSERDA) has helped overcome a major bottleneck by providing funding for early-stage, pre-development costs – the stage where many promising community-led projects fail.
State-level policies like this are key to avoiding a cliff and ensuring that the economic opportunities and energy resilience provided by solar and storage continue to strengthen communities and the overall energy grid. As the renewables sector across the United States adapts to new realities, Allen stressed the importance of using this period of acceleration to build momentum that will endure even after federal tax credits wind down.
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