2028 Solar Investment Tax Credit Updates

Hi Everyone, I've spent the past three weeks in DC speaking with members of the House and Senate and their staff about solar policy. I've mainly focused my efforts on Section 25D and Section 48E. I've also had the honor of working with so many incredible colleagues and industry friends. This is the critical week where it all happens. The game is on the line. Here is what I believe: -> A homeowner’s right to purchase and own their own solar system using the Section 25D tax credit is equally as important and fundamental as residential solar leasing, commercial solar or utility scale solar that use the Section 48E tax credit. Yet right now in the Senate Finance Committee language (and the House Bill), Section 25D dies effectively at the end of 2025 whereas the Section 48E credit has more runway. That is awful public policy. -> The Section 25D credit should be ended in a responsible manner that provides certainty and fairness to homeowners and businesses and savings to Congress. -> We (Sunstone Credit Sunlight Financial and many of our industry peers) have advocated for a Section 25D glidepath of 30% in 2026, 20% in 2027, 10% in 2028 and 0% in 2029.  This ends the Section 25D credit by 12/31/2028. It’s fair and reasonable for everyone. By then we will have figured out how to operate without the credit. Everyone wins. -> This proposal allows Congress to achieve ~93% of the savings (could be a bit more or less depending on your assumptions regarding the CBO/JCT numbers) from the current draft and allows the solar industry to help achieve the Trump Administration’s goal of American Energy Dominance. It also allows preserves jobs, delivers more electrons to the grid and savings to American households while supporting domestic solar manufacturing and not ceding the solar industry to our geopolitical rivals. -> The glidepath for the Section 48E credit should look more like what I proposed for Section 25D than it does now (currently it is 18%/6%/0%) and there needs to be reasonable rules around when a system must be placed in service by.  -> The restriction on residential solar leasing should be removed. Americans should be able to decide whether they want to own (using 25D) or lease (using 48E) a solar system. Let market forces prevail. -> Solar and other energy incentives (including Wind/Oil/Gas/Nuclear etc.) can’t last in perpetuity. They all need a glidepath to termination as soon as reasonably possible.  But the nature of the glidepath needs to reflect the underlying reality of each specific industry.  -> For Section 25D residential solar, IMHO, that end date should be 12/31/2028 with the 30%/20%/10%/0% glidepath to get there. If you agree, share the word publicly. #residentialsolar #Section25D #commercialsolar #solar

We just got final rules on the tech-neutral ITC! And the timing could not be better. Yesterday, the U.S. Department of the Treasury released final guidance on the Clean Electricity Investment and Production Tax Credits, known as 45Y and 48E. These credits apply to projects beginning construction this year and will be in place until 2034. This is big for two reasons: 1) Long-term certainty. After years of 1 to 2 year ITC extensions, these credits have a much longer time horizon. That allows companies to confidently invest their dollars, knowing that their tax bills won’t change dramatically. The certainty means more jobs, more investment, and a stronger foundation for our energy security. 2) More manufacturing. This tax credit is critical for driving investments in American-made energy projects (particularly solar, which is adding more capacity to the energy grid than any other fuel source). Critically, this tax credit further incentivizes solar and storage projects to use U.S.-made components like solar modules, trackers, and batteries. That means more demand for U.S. manufacturing across the entire value chain. Stronger American energy incentives mean more American-made energy. It’s that simple. You can read SEIA’s full statement on the tech-neutral tax credit rules here: https://lnkd.in/eM7hYqgb And read my statement in Axios here: https://lnkd.in/e-w8Md_X

Today (May 22nd), the House approved the budget reconciliation bill to extend Tax Cuts & Jobs Act provisions expiring at the end of 2025, provide border security funding, cut mandatory spending, and make changes to the renewable energy provisions, among other things. On the energy tax front, the bill would change the technology-neutral credits (Section 45Y and Section 48E) by, in part, (1) eliminating the phase-out of the credit and placed-in-service rules and replacing it with a termination of the credit for facilities that have not begun construction 60 days after date of enactment and have not been placed in service by December 31, 2028; (2) change the begin construction date for advanced nuclear facility rules under Section 45J; (3) accelerate the FEOC restriction; (3) prevents the credits from being used in leasing arrangements to provide residential solar and wind; and (4) restores transferability. With respect to Section 45U, the Bill would repeal the phase-out, restore transferability, but would also change the expiration of the credit to one year earlier. #energytax #eytax #ey  

Battery Projects Are Safe.  Solar? You Need a Plan. The new OBBBA law brings big changes to solar tax credit eligibility—and you’ll need a smart strategy to get the most out of your solar goals. Key takeaways: • Battery energy storage projects are not affected; the ITC remains intact. • ITC ends for solar projects not placed in service by Dec 31, 2027—but only if construction starts after July 4, 2026. • Projects that start during the next 12 months have four years to be placed in service and receive the ITC. • “Placed in service” means a project is ready to operate. Utility interconnection is not required. • MACRS depreciation for solar energy property is eliminated but is replaced with permanent 100% bonus depreciation. • The IRC §48E Investment Tax Credit (ITC) remains intact for third-party leased commercial solar PV energy property. • New rules prohibit solar tax credit eligibility if “material assistance” is provided by a Chinese-owned entity, for projects that start construction after December 31, 2025. • Any new IRS guidance on the start of construction safe harbor, compelled by a White House executive order, is not likely to survive legal challenge if it adversely changes previously issued guidance. What to do now: • To preserve ITC eligibility, contract and spend at least 5% of eligible project costs ASAP. • Begin soft-cost activities like engineering or permitting. This strategy protects your project from legal and tax risk while preserving key incentives. Read the full breakdown here: https://lnkd.in/eV53tTug #solar #energystorage #taxcredits #cleanenergy #commercialsolar #renewables #projectdevelopment #energystrategy

By now I’m sure you’ve all heard about the Big Beautiful Bill passing the house and heading to the senate. Here’s a simple breakdown of how the Amended Reconciliation Bill Impacts Residential Solar (as of May 21, 2025) 1. Homeowner-Owned Solar (Section 25D) • Provision: Eliminates the Residential Clean Energy Credit (25D). • Effective Date: For systems placed in service after December 31, 2025. • Impact: Homeowners who buy solar (cash or loan) after 2025 receive no federal tax credit. • Systems installed before that date are still eligible, and carryforwards remain valid. Status Check: Confirmed in original bill and unchanged in the manager’s amendment. ⸻ 2. Residential Leases and PPAs (Third-Party Ownership via Section 48E) A. Leased Systems Ineligible for Credit • Provision: Adds a new clause to Section 48E(e) (page 32 of the amendment): “No credit shall be allowed under this section for any investment… if the taxpayer leases the property to a third party and the lessee would qualify under Section 25D had they owned it.” • Impact: any solar company that leases a system to a homeowner can no longer claim Section 48E credits. • This kills all new residential solar leases and PPAs, even if construction begins within 60 days. ⸻ B. 60-Day Construction Rule = Effective Immediate Cutoff • Provision: Section 48E(j)(1)(A) – page 31 of the amendment: “No credit shall be allowed… for any facility the construction of which begins after 60 days from enactment.” • Impact: only projects that start physical construction within 60 days of the bill becoming law would qualify. • Combined with the leasing ban, almost no new residential systems would be eligible after that window. ⸻ C. Repeal of Transferability • Provision: Repeals key clauses from Section 6418, the credit transfer rule (page 34). • Impact: solar companies would no longer be able to sell tax credits to investors. • This collapses the tax equity model used to fund leases/PPAs and small developer projects. ⸻ Full Residential Impact Summary: • If the Bill Passes, Homeowner-owned (25D) 30% tax credit ends after 2025. • Leased systems (48E) Immediately disqualified. • New projects Must begin construction within 60 days—unrealistic for residential. • Credit transferability Repealed—no monetization pathway. • TPO model viability Eliminated in residential. If you’re a solar contractor, I’m sure you’re scrambling to figure out how you’re going to adjust to this massive change. Stay tuned for my next post to see some of the things we expect to see, and feel free to leave a comment with your thoughts!