The Trump administration has once again put renewable energy in the crosshairs. The last Friday, the Treasury Department released new guidance that tightens tax rules for wind and solar projects, making it harder for them to qualify for the federal tax credits that have historically fueled their growth.

The change, which takes effect on September 2, eliminates for most projects larger than 1.5 megawatts one of the most widely used pathways for developers to demonstrate they have “begun construction”: the 5% Safe Harbor rule, which allowed eligibility by spending just 5% of the project’s total cost before the deadline.

From now on, the only option will be to prove “physical work of a significant nature” on a continuous basis — a more ambiguous and costly requirement that could complicate project financing.

A direct attack on the cheapest, most competitive energy

The measure is part of the One Big Beautiful Bill Act (OBBBA), passed by Republicans last month, which drastically shortened the timeline for accessing tax credits: from 2032 under the Inflation Reduction Act to July 2026 under OBBBA.

With Treasury’s new guidance, large-scale projects — from community solar farms to utility-scale wind installations — face bigger hurdles just as U.S. electricity demand is surging due to the boom in data centers, manufacturing, and economic growth.

The renewable sector, which accounted for 96% of new power capacity in 2024, warns the changes will slash projected growth by more than half over the coming decade.

Reactions: “an act of energy subtraction”

Criticism came swiftly. Abigail Ross Hopper, president of the Solar Energy Industries Association (SEIA), called the decision “yet another act of energy subtraction from the Trump administration that will further delay the buildout of affordable, reliable power.”

The American Clean Power Association (ACP) also condemned the move. CEO Jason Grumet stated:

“The Treasury Department’s decision to accelerate the phase-out of clean energy tax credits undermines the integrity of our energy grid and our legislative process. Congress had established a one-year transition period to prevent energy price hikes. Treasury is undermining that agreement.”

Uneven impact

The new rules hit large-scale wind and solar projects the hardest but exempt residential and commercial installations under 1.5 MW. Companies like Sunrun, Freedom Forever, SolarEdge, and Enphase saw their stock prices rise on Friday after the announcement, while large developers now face heightened uncertainty.

Andy Moon, CEO of Reunion Infrastructure, put it bluntly: “You can’t just go build roads and install racking overnight. These rules make it much harder and riskier to finance projects.”

A crossroads for the U.S.

With wait times of five to seven years for new gas turbines, and even longer for nuclear and geothermal plants, solar and wind remain the fastest and most cost-effective options to expand the nation’s power supply.

Yet the combination of OBBBA and Treasury’s new guidance threatens to bring that expansion to a halt — just when affordable, clean energy is needed most.