RenewVerde Newsletter – July 2025

The “One Big Beautiful Bill Act”

The biggest renewable energy news in July was the passage of the “One Big Beautiful Bill Act”.  This newsletter covered the bill two months ago, when the House of Representatives passed the initial version, but the OBBBA has changed considerably since then.  Understandably, a lot of attention has been given to the fact that this bill will reduce access to health care and food stamps for millions of people. However, the scope of the bill is much larger than that, and it modifies hundreds of federal programs. The new law will have a major impact on solar and wind development, by abruptly ending the main incentive program for large wind and solar projects.

Changes to the Investment Tax Credits for Renewable Energy and Battery Storage Projects

The Investment Tax Credit (ITC) for renewable energy projects awards developers a tax credit of 30% on the total cost of the project when the plant goes into service. This program had a planned phase out, such that projects would need to be in construction by 2033 to see the full benefits, and projects that began construction after 2035 would not receive any tax credits. The “One Big Beautiful Bill Act” changed the phaseout to an abrupt end for solar and wind facilities. Wind or solar projects must be in service by the end of 2027 to receive the investment tax credit. However, because this section of the bill does not go into effect until July 4, 2026, wind and solar developers can avoid the 2027 deadline if the project is under construction within the next year. The ITC is still available for any energy storage projects and the phaseout starting in 2033 remains unchanged. 

Additionally, renewable energy and energy storage facilities which begin construction after 2025 cannot receive any material assistance from companies with ties to Russia, China, North Korea, or Iran.  Projects which use a large amount of manufactured materials, such as solar panels or battery cells, made by companies in those countries could be denied tax credits and other requirements may apply. This part of the law could have a major impact on the development of utility scale battery projects, since a large portion of global lithium-ion battery manufacturing is done by Chinese companies. It will impact solar panel manufacturing as well, but a larger portion of the supply comes from other countries which should lessen the impacts of this requirement. On July 7th, President Trump issued an executive order which instructed the Secretary of the Treasury to implement the “Foreign Entities of Concern” provision within 45 days, so more information on how this policy will be enforced will be available in late August.

Read the executive order

A concern about the ITC for solar and wind projects is the definition of started construction. Projects where the developer has paid 5% or more of the total project cost have historically been considered to have begun construction, but in the same executive order mentioned above, Trump instructed the Secretary of the Treasury to provide additional clarifications and prevent developers from incorrectly qualifying for having started construction. Many companies are planning to make payments on materials to ensure that their projects have met the definition of under construction before July of next year. However, uncertainty around this definition makes it difficult for developers to be sure that their projects will qualify. The Trump administration has already interpreted the law in unprecedented ways and ignored court rulings. There is a real possibility that projects which should qualify for investment tax credits will be denied them, and then forced to take on a difficult legal battle. 

The full bill can be found here. Section 70513 contains the changes to investment tax credits.

Impacts of the One Big Beautiful Bill

The final passage of the law has brought some clarity to how the investment tax credits for renewable energy will look going forward, but there is still a lot of uncertainty. This makes it challenging for developers to know what their project costs will be and tougher for banks to invest in projects, which will reduce the number of solar and wind farms that get built overall.

Some of the other federal programs which support renewable energy are still in place, which will help with project financing in place of the ITC. Bonus depreciation allows developers to get a large tax deduction right away, rather than taking it out over the lifetime of the project, which can greatly improve project financing plans. The amount a plant was allowed to deduct had been decreasing annually, but the bill has increased bonus depreciation back to 100%.

Overall, this bill is a setback for renewable energy and a step in the wrong direction for electricity reliability and prices. The US is facing an electricity reliability crisis, caused mainly by an increase in electrical load while generation development has not been keeping pace.  Solar and wind are non-dispatchable resources, which prevents them from having a major benefit to grid reliability, but reducing the amount of generation coming online is the last thing needed right now.  Battery projects are one of the best ways to combat the unreliable nature of renewables and strongly support reliability, so the impacts that foreign entity requirements will have on battery projects will hurt grid reliability .

Looking for more information? Read this article on all of the impacted programs which affect energy development from Norton Rose Fulbright.