The US renewable energy industry is bracing for a critical update from the Treasury Department on tax credit eligibility by August 18. The update comes as part of President Trump’s directive to enforce the phasing out of tax breaks for wind and solar projects, which was signed into law in July.
As of now, developers can claim a 30% tax credit through 2032, but the new guidelines would require projects to start construction within a year or begin service by the end of 2027 to qualify. This change has prompted industry representatives to rush forward with new projects, expecting potential revisions to the definition of “beginning of construction”.
Analysts warn that if Treasury increases the minimum construction amount or decreases the safe harbor window, it could negatively impact the massive pull-forward of projects over the next 12 months. Some investors are questioning whether companies like Quanta Services (PWR), a provider of infrastructure services for the power industry, are truly undervalued.
The US electricity demand is anticipated to grow by 25% by 2030 due to an artificial intelligence boom and cloud computing, highlighting the need for new generation projects. However, concerns over national security and foreign supply chains have led Trump to argue that renewable energy resources are expensive, unreliable, and displace more “dispatchable” energy sources.
Source: https://www.investing.com/news/stock-market-news/how-could-a-change-in-us-energy-policy-impact-the-renewable-sector-4155582