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Audience Questions, Expert Answers: What the OBBBA Means for You

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Earlier this summer, renewable energy and tax experts from ENGIE and Holland & Knight joined leaders from Schneider Electric's Renewable Energy & Carbon Advisory for “The Renewables Landscape After the OBBBA: Insights & Impacts.” The panel offered reactions and recommendations following the passage of the OBBBA, including fielding questions from the audience. This blog addresses several of the audience’s questions that now have additional clarity. 

What exactly does "start construction" mean?

Senior Director Hans Royal’s recent blog post on the implications of the new guidance for corporate buyers provides a deep dive on this question. For background, the concept of "beginning of construction" (BOC) is not defined by law or regulation.  Over many years, the IRS has issued many notices that provide a safe harbor from IRS challenges if the project has met certain conditions. The IRS released updated guidance on Friday, August 15th in Notice 2025-42. Here are the clarified safe harbor paths:

  • Physical Work Test: Start "physical work of a significant nature."  This test focuses on the nature of the work, both on- and offsite, and depends on all of the relevant facts and circumstances. Examples of facts that may indicate construction of a significant nature include the manufacture of power components/equipment, installation of solar racks, and installation of wind tower foundations.

  • 5% safe harbor: Construction is considered to have begun if the taxpayer pays or incurs at least 5% of the cost of the energy property. (Note: Now only available for solar projects under 1.5MW. Unavailable for solar projects larger >1.5MW and no wind projects.)

  • Continuity Safe Harbor: Each of the above 2 methods require continuous advancement towards completion of construction. Under current guidance, if the owner places the project into service by the end of the fourth year following the year in which construction begins, then the IRS will consider this continuity requirement satisfied.

Does the OBBBA have any impact on battery storage?

In contrast to wind and solar, energy storage projects retain the original credit phaseout schedule: fully qualifying through 2034, and phasing down thereafter. However, storage projects must begin construction by December 31st, 2025, to avoid the Foreign Entity of Concern rules. Specifically, in 2026 and on, storage projects must avoid "material assistance" from a Prohibited Foreign Entity to continue to qualify for credits.

Is this still a good time to invest in renewable energy?

Yes, and we’re seeing three converging trends that demonstrate the real opportunity that exists:

  1. Tax Credits Remain - the budget law passed by the Trump Administration on July 4th heavily impacted the availability of future tax credits, especially for wind and solar projects, but preexisting as well as credits from projects that start construction by July 4, 2026, remain available to purchase. As the supply of tax credits is expected to be constrained in the future, now is an ideal window to secure tax savings with optimal pricing and tax savings.

  2. Energy Demand is Skyrocketing – Largely driven by AI and the corresponding construction of energy intensive data centers, energy prices have and will continue to increase. The cuts to renewable energy tax credits and hurdles to construction only exacerbate this trend.

  3. Looming Corporate Environmental Goals – Many corporations set 2030 climate or greenhouse gas reduction goals. With potential changes to the GHG protocol and accounting standards, now is a good time to secure PPAs or TCTs paired with long-term REC strips. 

Will companies walk back their sustainability commitments? 

Many of our clients remain committed to their decarbonization goals. In fact, the Science Based Targets initiative recently announced a 227% jump in companies setting near-term and net-zero targets (between end of 2023 and Q2 2025).

We view this sustained corporate commitment as recognition that many of the available initiatives are cost-saving, offer positive returns on their investment, or achieve substantial sustainability impact. For example, tax credit transfers (TCTs) are a mechanism that can be used to maximize tax savings, with the flexibility to use these savings to offset the purchase of Renewable Energy Certificates (RECs) or Power Purchase Agreements (PPAs). 

Schneider Electric remains the right fit to leverage these opportunities.

As outlined above, now is an opportune time to invest in PPAs as well, as we expect energy prices to rise. Regardless of the path an organization choses, Schneider Electric remains a steady, committed advisor to help its clients achieve their specific renewable energy goals.

Please reach out to our team to connect with a Schneider Electric Sustainability Business renewable energy expert.