Treasury Narrows Wind and Solar Tax Credits, Industry Sees Project Risk

The U.S. Treasury Department on Friday issued guidance that tightens long-standing rules governing federal investment and production tax credits for wind and solar projects. Developers will now have to demonstrate "substantial and continuous" physical construction to qualify for the 30% credits, replacing a decade-old provision that allowed projects to lock in the subsidy by spending 5% of total costs before the incentive steps down. The incentives, created in July under President Donald Trump’s sweeping tax-and-spending law, are scheduled to phase out over the next two years. Industry groups warned the change could delay or cancel scores of projects. The Solar Energy Industries Association called the move "another act of energy subtraction," while consultancy Clean Energy Associates estimated the United States could lose about 60 gigawatts of planned solar capacity through 2030 if the stricter definition of construction remains in place. Major electricity buyers also raised alarms. In a letter seen by Reuters, the Data Center Coalition—whose members include Google, Amazon and Microsoft—told Treasury Secretary Scott Bessent that any new hurdles would impede efforts to secure the additional generation needed to power artificial-intelligence data centers, adding that "regulatory friction" now will affect future electricity supply. Financial markets took the rules in stride: shares of large solar companies jumped as the guidance proved less punitive than some investors had feared. Residential-solar provider Sunrun surged as much as 28%, utility-scale developer NextEra Energy rose about 5%, and equipment maker NexTracker gained nearly 9%. The guidance implements a July executive order from Trump directing agencies to tighten renewable-energy incentives and forms part of a broader deregulatory agenda favoring fossil-fuel development. Republican Senator Chuck Grassley, a long-time champion of wind energy, said the document appears to give developers a "viable off-ramp" to continue claiming credits, suggesting further legislative or administrative tweaks could follow.