The U.S. Treasury Department and Internal Revenue Service (IRS) have issued new guidance on the "beginning of construction" requirements for wind and solar energy projects, impacting eligibility for federal production tax credits (PTC) and investment tax credits (ITC). The updated rules eliminate the previously available 5% safe harbor for wind and solar projects, replacing it with a more stringent physical work test. Despite these tightened standards, the guidance was considered less onerous than initially feared by market analysts and investors. As a result, shares of U.S. solar companies such as Sunrun, SolarEdge, and First Solar rose sharply, with Sunrun gaining over 9% in a single day and 30% over five days, while First Solar and SolarEdge saw increases of 18% and 22%, respectively. Vestas Wind Systems A/S also experienced a significant share price increase following the announcement. The guidance clarifies that projects started in 2023 remain eligible for tax credits under lenient definitions. However, the new rules make it more difficult for some solar and wind facilities to qualify, prompting developers to accelerate project timelines. Additionally, the U.S. Department of Agriculture (USDA) has limited funding for solar and wind projects on farmland, and Department of the Interior (DOI) memos may create further challenges for renewable energy development. Private equity-backed businesses that assist developers in selling tax credits are reportedly seeing new opportunities amid these regulatory changes. Overall, the market reaction indicates relief that the Treasury and IRS guidance balances regulatory tightening with continued support for clean energy investments.