On Friday, 15 August, the US’ Trump administration introduced stricter eligibility rules for clean energy tax credits, raising concerns over the future of numerous renewable projects, Bloomberg reports.
New Treasury Department guidance issued on Friday alters the criteria for investment and production tax credits by tightening definitions of when construction is considered to have begun.
Developers must now demonstrate “physical work of a significant nature” on an ongoing basis, replacing the previous threshold that allowed projects to qualify if at least 5% of costs had been spent.
“Projects are going to have a difficult time achieving these levels of performance,” said Rhone Resch, Chief Executive of Advanced Energy Advisors. He added:
“What it is going to do is reward sophisticated companies that have projects that are farther along in their development. The companies that are going to suffer are the smaller medium medium-sized developers that aren’t going to be able to meet this time frame.”
The decision forms part of a wider push from the administration to curb solar and wind development, following an executive order directing new limits on tax credits and a series of additional permitting reviews. A planned wind farm in Idaho has already been cancelled.
Shares of major solar companies rose after the announcement, with Sunrun climbing as much as 28%, NextEra Energy up 5%, and NexTracker almost 9%.
BloombergNEF estimates more than 2,500 proposed projects, equivalent in capacity to about 383 nuclear reactors, could be affected. However, large developers have indicated they are well-positioned.
NextEra said it has sufficient projects under construction to meet its plans through 2029, while AES Corp. reported most of its pipeline will not be impacted.
Industry feedback
Industry analysts warn that the tighter rules add pressure to a sector already facing declining support, with US clean energy installations forecast to fall 41% after 2027 as tax credits phase out.
“This is yet another act of energy subtraction from the Trump administration that will further delay the buildout of affordable, reliable power,” commented Abigail Ross Hopper, President and CEO of the Solar Energy Industries Association (SEIA).
“American families and businesses will pay more for electricity as a result of this action, and China will continue to outpace us in the race for electricity to power AI. SEIA is carefully reviewing the guidance and evaluating next steps to protect the industry’s and America’s interests, as we have been since this side deal was announced last month.
“In the meantime, we urge the Trump administration to stop the political games, stop punishing businesses, and get serious about how to actually build the power we need right now to meet demand and stay competitive.”
[Edited 20 August 2025 to include commentary from SEIA]
