The US Treasury Department and Internal Revenue Service (IRS) have issued new guidance narrowing eligibility for federal tax credits for wind and solar projects in the USA. The rules eliminate the “5 percent safe harbour” for large projects, which had allowed developers to qualify by making upfront equipment purchases.
Developers must now show physical work on site and complete projects within four years to claim credits. The safe harbour remains for rooftop and small-scale solar.
Industry groups criticised the move, saying it undermines the compromise reached in Congress that allowed one year for projects to qualify during the phaseout. The Solar Energy Industries Association warned the changes would increase costs and slow clean energy growth, while the American Clean Power Association said the guidance weakens legislative agreements.
Analysts expect large projects to adapt, but smaller developers may struggle, with overall wind and solar deployment projected to decline in the coming years.
