In the five months since the passage of the GOP’s “One Big Beautiful Bill” slashed domestic clean energy incentives, the U.S. clean energy sector has moved rapidly to safe harbor wind and solar projects.
According to a report out this week from PPA marketplace LevelTen Energy, 76% of solar projects and 86% of wind projects slated to come online by the end of 2028 are already safe-harbored. Those projects account for around 33 gigawatts of capacity eligible for tax credits.
The final OBBB was a little more lenient on clean energy tax credits than earlier iterations of the legislation. The law gave wind and solar projects until July 4, 2026 to “commence construction” — which would allow them an additional four years to build and come online, and still qualify for the credits. According to updated guidance from the Treasury Department, projects must have started physical work to qualify; prior guidance allowed projects that had spent at least 5% of their total costs to be classified as having started construction.
Solar stocks soared in mid-August after a leaked copy of the new guidance indicated the Treasury declined to go as far as some in the Trump administration had hoped to curb the use of safe harbor. The agency declined to shorten the four-year safe harbor period, and also confirmed that construction could begin offsite.
In the wake of the guidance, shares in manufacturers like First Solar and Enphase, as well as in developers like Sunrun, surged. And at least in the short-term, it looks like the stock market’s optimism was well-placed. But beyond 2028, the number of safe-harbored projects plunges dramatically. Just 38% of solar projects and 16% of wind projects slated to come online in 2029 and beyond have locked in tax credit eligibility by commencing construction.
Meanwhile, in both the short- and longer-term, the outlook for energy storage is strong. The technology emerged largely unscathed from the OBBB, avoiding the early phase-out of tax credits that hit both wind and solar. Energy storage projects can continue to qualify for both the 48E investment tax credit and the 45Y production tax credit under the original Inflation Reduction Act timelines.
According to LevelTen’s survey, storage and hybrid asset development are on a steep upward trajectory, and will grow by more than ten-fold in the next five years, from 3% of developers’ pipelines in 2026 to 48% by 2030.
By that year, storage and hybrid projects are projected to surpass standalone wind and solar pipelines. And beyond 2030, hybrid development plans “exceed all other technologies by a substantial margin.”
Challenges remain
Even for those projects that have secured tax credit eligibility, however, significant hurdles remain before they’re sending power to the grid. Projects must still navigate myriad uncertainties, including permitting challenges and interconnection queues, rising costs, and lack of available components and labor.
Of particular concern for many developers are the forthcoming “foreign entity of concern” rules, which will expand restrictions on eligibility for certain tax credits.
The definition of a foreign entity of concern outlined in OBBB spanned dozens of pages, reaching a huge range of companies with direct and indirect ties to China, North Korea, and Iran. But the restrictions go beyond just the companies incorporated in those countries or on a U.S. government list; significant questions remain, which is why developers are anxiously awaiting Treasury’s upcoming guidance.
That guidance will, in theory, outline how to determine whether suppliers are “foreign influenced entities,” for example, Power Brief CEO Jason Clark explained on a Latitude Dispatch earlier this year.
However, given the timelines for FEOC compliance, the forthcoming guidance may actually be most influential for storage projects. Energy storage must meet a 55% threshold — of components that do not come from a prohibited entity — by January 2026. That jumps to 60% in 2027, and up to 75% in 2030. Wind and solar developers, whose tax credit eligibility will have phased out by mid-next year, may not have to worry.
