A New Law and a New Window for Action
Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) introduces the most consequential federal policy shifts we’ve seen in years for commercial solar and battery storage projects. While the long-term goal is to stabilize and strengthen clean energy deployment across the United States, the legislation creates short-term urgency for building owners, developers, and third-party investors.
If you’re planning a solar or battery storage project, the next 12 months are crucial for preserving tax credit value, managing risk, and maintaining access to third-party financing models like leases and power purchase agreements.
Understanding the Timeline: Tax Credit Eligibility Is Now Tied to Construction Start Date
The legislation changes how projects qualify for two federal incentives:
- The Investment Tax Credit (ITC)
- The Production Tax Credit (PTC)
Previously, flexibility around project timelines allowed for longer development cycles. Under the new rules, this flexibility now hinges on when construction begins:
- Start before July 4, 2026 → You’ll have up to 4 years to complete your project and still receive full tax credits.
- Start after July 4, 2026 → Your project must be placed in service (meaning installed, connected, and producing electricity) by December 31, 2027 to qualify for full credits.
Battery storage projects remain subject to the phase-out timeline outlined in the Inflation Reduction Act (IRA), with credits declining if projects miss their window.
Safe Harbor Still Exists But With Stricter Guardrails
The concept of Safe Harbor allows developers and investors to “lock in” a project’s eligibility by demonstrating progress. Under OBBBA, this remains an option, but the criteria and scrutiny have increased.
To qualify, you must show one of the following:
- Physical work has commenced (such as foundations poured or major equipment purchased), or
- At least 5% of total project costs have been incurred.
However, the Internal Revenue Service (IRS) and Department of the Treasury have signaled a more stringent review process, with updated guidance expected by August 21, 2025. This means documentation, timing, and project audit-readiness are now essential, not optional.
New Equipment Sourcing Rules and FEOC Restrictions
Starting in 2026, OBBBA introduces phased requirements for where solar panels, batteries, and related equipment must be sourced. A percentage of project components must come from approved, non-restricted suppliers:
- 40% in 2026
- 45% in 2027
- 50% in 2028
This is where things get especially complicated. Some equipment manufacturers may soon fall under Foreign Entities of Concern (FEOC) restrictions, which disqualify certain suppliers from participation in U.S. tax-incentivized projects. An FEOC may include companies under the control of a foreign government, entities on the U.S. sanctions list, or those involved in activities deemed detrimental to national security¹.
With final guidance on FEOC expected soon uncertainty in the solar module market is growing. We’ve already seen some developers bulk-purchase Tier 1 modules to avoid potential restrictions or price increases. Others are stockpiling product based on current assumptions of eligibility.
But this can be risky. In my experience, I’ve seen companies procure solar modules years in advance, only to have market shifts, policy changes, or delays render them obsolete or ineligible. Commercial solar projects often span 2–3 years from feasibility to completion. That’s a long time to warehouse product and a big financial gamble.
Impacts on Third-Party Financing Models
Power purchase agreements (PPAs) and solar leases have long enabled building owners to adopt solar with minimal upfront cost. Under these models, an investor or developer owns and maintains the system, while the building owner either purchases the energy at a lower rate or simply leases their rooftop space.
OBBBA raises the stakes for this model.
If third-party owned projects don’t begin construction before July 4, 2026, investors may no longer qualify for full tax credits. This could lead to:
- Fewer developers willing to finance systems
- Higher electricity rates for hosts
- Less favorable lease terms
- Reduced availability of “no-cost” rooftop deals
And since Safe Harbor and sourcing rules are also tightening, some projects may face longer development cycles just as the deadline pressure intensifies.
Market Volatility and the “Solar Coaster”
While we’re glad that guidance around Safe Harbor and OBBBA is beginning to emerge, solar developers are still riding a wave of uncertainty.
Some manufacturers with U.S. expansion plans are slowing or pausing due to potential FEOC listing risk. At the same time, some residential and commercial solar firms like Meyer Burger, Solar Mosaic, and Sunnova have filed for bankruptcy, underscoring how fragile parts of the market remain.
Meanwhile, well-capitalized installers may see a short-term advantage. As developers rush to meet the new deadlines, qualified labor will be in high demand, and installers may begin to raise prices or become more selective about who they work with. It’s a reminder: developers need to engage contractors early and often.
What Should Building Owners and Investors Do?
This is a moment that rewards preparation. The developers and owners who succeed under OBBBA will be the ones who:
- Start planning now, not when deadlines are 6–12 months away
- Understand equipment eligibility and sourcing risks
- Keep clear documentation for Safe Harbor compliance
- Engage solar consultants early
- Vet financing partners and EPC teams ahead of crunch time
Solar and storage projects have always had long development timelines. OBBBA doesn’t change that, but it does change how risk and reward are distributed across that timeline.
A Slower But Stronger Industry?
In California, investor-owned utilities have raised rates an average of 6–11% annually over the past decade. This trend is unlikely to reverse, and rising energy costs will continue to drive interest in onsite renewables, even as tax credit values taper.
While OBBBA introduces complexity, it also brings structure and ideally, more domestic resilience in the clean energy supply chain. The road ahead may be slower, but it may also be sturdier.
Final Thought
From project siting and financing to battery integration and contractor selection, solar and storage require a comprehensive, long-view strategy. The One Big Beautiful Bill Act doesn’t just reward action, it demands foresight.
If you’re navigating solar feasibility or planning a portfolio-wide solar rollout, my advice is simple: start now—and bring the right partners to the table.
¹ *A Foreign Entity of Concern (FEOC) is defined by the U.S. Department of Energy as an entity that is:
- A designated foreign terrorist organization
- On the U.S. Department of the Treasury’s Specially Designated Nationals list
- Owned or controlled by a foreign government
- Involved in conduct deemed harmful to U.S. national security or foreign policy*
Posted 9/25/25
About the Author
Kevin Weinberg is GAIA’s Portfolio Solar Consultant. He brings over two decades of solar expertise and over $120M in deployed solar projects for portfolios, including Fortune 100 companies. His experience in conceptual solar design, financial analysis, and project execution continues to contribute to expanding solar and storage markets.
