Will The OBBB Put An End To Heavily Subsidized Wind And Solar Generation Projects?

What does the future hold as to large additions to heavily subsidized wind and solar electricity generation capacity in the U.S.? For those paying attention, the legislative back-and-forth of the One Big Beautiful Bill, as it made its way through Congress, has been something of a roller coaster ride. At this point, I am betting that the utility-scale wind and solar industries are near the end of their line. This post reports on the latest development, which is an Executive Order signed by President Trump on July 7. But count on the wind and solar subsidy farmers to keep fighting to the last dollar of their government handouts.

Note that it is my view, from extensive study of the subject, that wind and solar generators of electricity are essentially useless, not to mention dangerous and costly, for a modern grid that needs reliable generation 24/7/365. Nobody will invest private capital in them without huge government subsidies. To date those subsidies have been provided mostly in the form of tax credits under the Internal Revenue Code. Those tax credits have existed since 1978 (and since 1992 for an additional tax credit for wind generation), always with expiration dates that, however, have time and again been extended as the deadlines neared.

I have had two previous posts about provisions in the OBBB on this subject: this one from May 24 (immediately after the House had passed its version of the Bill), and this one from July 6 (after the President had just signed the final Bill into law). As I reported in the May 24 post, the version of the OBBB passed by the House had such strict limitations on further qualification for the wind and solar tax credits that it was likely that few if any additional projects would be able to qualify. Projects would have had only 60 days after enactment to begin construction, and would have had to enter service by 2027 — that is, before President Trump would leave office. That would mean that any attempt to revive the subsidies before they expired would have to overcome Trump’s veto. In other words, if the language in that version of the Bill had survived, the wind and solar industries were basically finished.

But as I then reported in the July 6 post, the final language of the OBBB as enacted appeared to give the big wind and big solar industries the chance to fight another day. The time to commence construction and qualify for the tax credits had been extended to a year (thus, to July 4, 2026), and the time to enter service had been extended to four years after that (thus, in 2030, which would be well beyond President Trump’s term). Big wind and solar would thus get a substantial window to commence new projects, plus an opportunity to lobby Congress for further extension of the credits in 2029 and 2030, after Trump had left office. The post quoted energy writer Alex Epstein as pointing out that the IRS rules on what constitutes beginning of construction were so lenient and flexible as to pose no real constraint on how many economically useless projects could qualify for a decade of taxpayer subsidies.

In an update to the July 6 post, I cited David Blackmon at the Daily Caller as attributing the tax credit deadline extensions in the final OBBB to a deal negotiated by Senator Lisa Murkowski of Alaska. This piece from Politico says that other Republican Senators, including Grassley and Ernst of Iowa and Curtis of Utah, were also involved in the deal.

Well, it turns out that people in the White House were on to the scam and have taken steps to try to ensure that the extended deadlines in the final OBBB do not turn into an open ended taxpayer blank check for the wind and solar industries.

Note that the potential for new deadlines in the OBBB to turn into such a massive blank check turns on how easy it is for large numbers of projects to qualify as having “begun construction” within the year ending July 4, 2026. The test for what constitutes “beginning of construction” appears in some IRS regulations adopted under the Internal Revenue Code sections providing for the tax credits; and during the Covid pandemic era, the IRS issued a notice of a “safe harbor” to qualify. Here is the IRS Notice from 2021 containing the relevant language. As Epstein notes, the test for “beginning construction” under the so-called safe harbor is “insanely-easy-to-meet. . . . All you need to do is commit 5% of expected project cost to buying re-sellable assets like solar panels.”

This is the specific loophole addressed by President Trump’s July 7 Executive Order. Here is the text of Section 3(a) of that Order:

Within 45 days following enactment of the One Big Beautiful Bill Act, the Secretary of the Treasury shall take all action as the Secretary of the Treasury deems necessary and appropriate to strictly enforce the termination of the clean electricity production and investment tax credits under sections 45Y and 48E of the Internal Revenue Code for wind and solar facilities.  This includes issuing new and revised guidance as the Secretary of the Treasury deems appropriate and consistent with applicable law to ensure that policies concerning the “beginning of construction” are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.

So the test for “beginning construction” will likely turn out to be not so easy to meet at all. The Secretary of the.Treasury is directed to issue “new and revised guidance” within 45 days from July 4, which would be August 18. We won’t know exactly how strict and onerous the new guidance is until it is issued, but we do know that Trump has directed that the purpose of the new guidance will be to assure that the new deadline as to “beginning of construction” is not “circumvented.”

According to Utility Dive here on July 9, the language of the Executive Order is the result of a deal reached between Trump and the House Freedom Caucus to secure their votes for passage of the OBBB. It seems that both sides can play this game.

I would think it is well within the power of Treasury Secretary Bessent to come up with guidance on the meaning of “beginning of construction” that will strongly discourage almost all efforts to try to qualify for the extended tax credits.