On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law—a sweeping piece of legislation that significantly alters how renewable energy projects qualify for federal tax credits. This legislation has immediate and long-term implications for developers, commercial clients, and energy storage stakeholders.

Ideal Energy has prepared the following breakdown to help our customers and partners understand the stakes and take timely action.

OBBBA at a Glance: What’s Changed?

• Accelerated timelines for beginning and completing projects to qualify for full tax credits
• New restrictions on equipment and financing tied to foreign entities
• Preserved and expanded depreciation options for energy projects
• Urgent procurement and construction decisions for 2025–2026

Solar Tax Credit Deadlines for Commercial Projects

Under the revised Section 45Y (PTC) and 48E (ITC):

• Projects must be placed in service by December 31, 2027 to qualify for full technology-neutral tax credits.
• Projects that start construction by July 4, 2026 get a four-year window to complete and still qualify.
• Bonus credits remain available for projects in “energy communities” or using domestic content.
  
  

Why Procurement Matters Now

Although IRS guidance still allows developers to “Safe Harbor” a project by incurring 5% of costs, Ideal Energy now strongly recommends beginning equipment procurement as quickly as possible. Supply chains for modules, inverters, and storage components are expected to tighten and prices will be driven upwards as developers and commercial customers rush to meet these deadlines.

By securing key equipment today, customers can:

• Lock in pricing
• Reserve limited inventory
• Avoid FEOC Requirements (see details below)

Maintain eligibility for tax credits before more restrictive policies take hold

Battery Storage and Other Technologies: Extended Timelines

Energy storage systems and non-solar/wind clean energy projects have until the end of 2033 to begin construction and still qualify for full tax credits. After that:

• Projects started in 2034 qualify for 75% credit
• Projects started in 2035 qualify for 50% credit
• Battery Storage projects started after the end of 2025 will also need to meet FEOC restrictions.
  

Updated Depreciation Rules Boost Project Economics

The final version of OBBBA preserves the ability to fully depreciate clean energy systems using the 5-year MACRS schedule—and makes 100% bonus depreciation a permanent feature of the tax code.

For systems placed in service in 2026, developers may also elect 40% or 60% depreciation, depending on project type and construction duration.

Understanding FEOC Rules: What to Avoid

OBBBA introduces new limitations on using components or capital connected to prohibited foreign entities—including companies with ownership or financing ties to China, Russia, Iran, or North Korea.

This includes:

• Equipment sourced from suppliers with 25%+ Chinese ownership
• Projects with 15%+ of original debt from Chinese lenders
• Long-term (10+ year) licensing or royalty agreements with Chinese-backed entities
  

Projects that start construction before the end of 2025 are exempt from these FEOC restrictions. Ideal Energy is actively auditing our supply chain to ensure compliance, but the simplest course of action is to meet the start of construction safe harbor requirements before the end of 2025.

What Commercial Clients Need to Do

1. Plan Equipment Procurement Now

With deadlines looming and demand spiking, early procurement is the most effective way to protect your tax credits and manage project costs.

2. Reserve Construction Capacity

We anticipate a significant bottleneck in available construction crews and materials in 2026 and 2027. Committing to your project early helps ensure your place on our schedule.

3. Work with a Trusted Partner

Ideal Energy brings deep experience with Prevailing Wage and Apprenticeship (PWA) compliance, developer partnerships, and Illinois-specific programs like Illinois Shines. Our team is ready to guide you through the new regulatory landscape.

What's Next?

Additional IRS guidance—particularly around what qualifies as “starting construction”—is expected by late August. In the meantime, the most strategic move is to get projects moving now.

The most valuable incentive isn’t just the credit—it’s the time you have left to claim it. Ideal Energy is here to help you lock-in safe harbor for your project so you can move forward with confidence.

Act now to avoid delays and maximize your solar tax benefits before the window narrows

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