Energy tax credits are not dead: Understanding the new reality for investment incentives
- The OBBBA accelerated deadlines for some solar and wind projects, but eligible projects can still preserve federal tax credits if they meet specific construction and placed-in-service requirements.
- Solar and wind developers that properly established “beginning of construction” before July 4, 2026, may continue to claim valuable credits if they satisfy IRS continuity rules.
- Geothermal, battery energy storage, fuel cells, biogas, combined heat and power, and other qualifying technologies generally have a longer credit phase-out schedule extending into the 2030s.
Following the One Big Beautiful Bill Act (OBBBA) and changes to federal energy tax incentives, many building owners, developers, contractors and renewable energy investors were concerned that solar and wind tax credits expired on July 4, 2026.
Their concerns are understandable but not entirely accurate.
Federal Investment Tax Credits (ITCs) didn’t disappear overnight. Instead, Congress accelerated the phase-out timeline for certain technologies while preserving credits for projects that meet specific construction and timing requirements. Several renewable energy technologies remain eligible for credits well beyond 2026.
How energy tax credits changed
The OBBBA significantly modified the Clean Electricity Investment Tax Credit and Production Tax Credit established under the Inflation Reduction Act. For solar and wind projects, the law introduced a new beginning-of-construction deadline of July 4, 2026.
Under the revised rules:
- Solar and wind projects that begin construction before July 4, 2026, can generally preserve eligibility for the federal tax credit.
- Solar and wind projects that begin construction after July 4, 2026, generally must be placed in service by December 31, 2027, to remain eligible.
- Projects that fail to meet these requirements may lose access to the federal ITC.
July 4, 2026, was a critical deadline for establishing project eligibility through recognized IRS beginning-of-construction methods, but not a universal expiration date.
How should contractors manage the new deadlines?
Projects that meet the construction deadlines can still claim valuable federal incentives after 2026, subject to IRS continuity requirements. In many cases, developers are using safe harbor strategies, equipment procurement, or physical work tests to secure eligibility before the deadline.
For developers with projects in planning, there may still be a substantial window to capture credits if the project is structured correctly.
Credits continue for geothermal, energy storage, and other technologies
Several technologies beyond solar and wind remain eligible for credits, including:
- Geothermal systems
- Stand-alone battery energy storage systems
- Fuel cells
- Combined heat and power systems
- Biogas projects
- Waste energy recovery property
- Certain thermal energy storage technologies
For these technologies, the law generally provides a longer phase-out schedule that extends into the next decade. Projects beginning construction before 2034 can still qualify for the full credit, with gradual reductions after 2034.
This is particularly significant for schools, healthcare systems, manufacturers, tribal organizations and commercial building owners considering geothermal heating and cooling systems. While much of the market has focused on solar and wind deadlines, geothermal projects may continue to qualify for significant federal incentives well into the next decade, making them an attractive option for organizations planning major capital improvements.
The opportunity is shifting, not disappearing
The market is transitioning from a period of abundant incentives to one that requires more planning and documentation. Organizations should also evaluate how tax credit monetization strategies, including transferability and applicable direct-pay opportunities, may affect overall project economics and financing.
Successfully securing tax credits in the future will depend on:
- Early project evaluation
- Proper beginning-of-construction documentation
- Domestic content analysis
- Supply chain compliance reviews
- Tax credit modeling
- Prevailing wage and apprenticeship compliance
- Strategic project timing
The incentive landscape is becoming more technical, not necessarily less valuable.
Organizations that wait until construction is complete to evaluate incentives may miss opportunities. Those that address tax credit requirements early in project development can often preserve significant financial benefits.
How Wipfli can help
Whether you’re evaluating a geothermal system, battery storage project, renewable energy installation or manufacturing investment, our team can help identify available incentives, assess eligibility requirements and model potential tax benefits before construction begins. For many organizations, the question is no longer whether incentives exist, but whether projects are being structured early enough to secure them. Start a conversation.
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