Watt’s the deal with the new IRS guidance that we’ve been anxiously awaiting for entitled "Beginning of Construction Requirements for Purposes of the Termination of Clean Electricity Production Credits and Clean Electricity Investment Credits for Applicable Wind and Solar Facilities?"
Well, the guidance was just released this past week, and while this is not good for the solar industry, it could’ve been worse. In fact, rumors leading up to the release had it being much worse.
So, while we’ve continued to take our beatings throughout the past 4 months on the heels of the One Big Beautiful Bill Act, let’s all take a rainbow breath as my daughter Chloe would say, as there’s still life at the end of this gauntlet.
What's in the new guidance?
The guidance is effective September 2, 2025, and it’s prospective, not retroactive, so you still have some time to safe harbor under the existing guidelines, if needed.
The new guidance eliminates the 5% construction spend safe harbor, except for solar projects 1.5 MWs and under. Such “low output” project can continue to utilize the 5% safe harbor as described in the previous guidance. This was a big win for the residential solar industry that exclusively relied on this rule for construction start safe harbor purposes.
That leaves us with the “physical work test” as the sole option to demonstrate the beginning of construction for projects larger than 1.5 MWs.
The new guidance doesn’t make any substantive changes to this test, and it's basically business as usual.
This includes no changes to the continuity safe harbor deadline, which is the end of the calendar year that is 4 years after a facility begins construction.
For projects starting construction this year, they’ll have until the end of 2029 to come online
For projects starting construction before July 1st, 2026, they’ll have until the end of 2030 to come online.
As a reminder, these changes are specific to solar and wind and do not apply to standalone energy storage, which still has the original runway on the ITC as laid out in the IRA – assuming you start construction by the end of 2033, you’ll have until 2037 to come online. Now, that’s a lot of runway!
This guidance isn’t the end of the road — it’s just a new map. With clear rules, plenty of runway, and storage still wide open, the clean energy future is very much alive.
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