Risk assessment company VDE Americas has released guidance for project owners and developers in meeting the July 4, 2026, deadline to qualify for sunsetting clean energy tax credits.
Credit: Alliant Energy
The conclusions in the technical memorandum, “Navigating Beginning of Construction Requirements for Solar Projects,” represent VDE’s assessment based on its interpretation of published guidance and expert understanding of engineering, procurement and construction best practices.
Through incentive changes in the One Big Beautiful Bill Act (OBBBA), solar projects over 1.5 MW must now meet a more rigorous tax credit eligibility threshold by performing qualified “physical work of a significant nature” before the deadline.
Developed by trusted engineering subject matter experts at VDE, the newly released technical memorandum empowers stakeholders to take decisive actions that maximize the number of solar projects qualifying for tax credits. It also compiles recommendations that developers can use to rightsize capital expenditures before project financing closes while reducing exposure to regulatory risks. The memo pertains to all commercial market sectors, provides guidance for utility and community solar projects, and covers both the investment tax credit (ITC) and production tax credit (PTC).
In addition to the detailed guidance in its technical memorandum, VDE offers the following high-level strategic recommendations:
- Download and review the beginning of construction tech memo. The guidelines include a detailed analysis of qualifying onsite and offsite work activities that will meet the physical work test. The memo also includes a 5-MW project example and a compendium of legal opinion levels.
- Meet the construction commencement deadline wherever possible. This date fundamentally alters solar project economics and execution risks. Projects that establish beginning of construction after July 4 face a challenging and potentially insurmountable 18-month placed-in-service deadline for tax credit eligibility.
- Adopt enhanced documentation standards to reduce interpretive risk. Thorough documentation that includes date-stamped photos with GPS coordinates and inspector reports is critical to meet the heightened “work performed” standard and prove completion of tax credit qualifying work activities.
- Execute contracts for products and services with tax credit eligibility in mind. Coordinate with your legal team — or use VDE’s turnkey request for proposal (RFP) templates — to establish comprehensive technical specifications that satisfy Treasury’s “physical work of a significant nature” requirements.
“We’re seeing extraordinary demand for additional power capacity throughout the United States, spurred by energy-intensive industries, American manufacturing initiatives, the rise of data centers, and broader electrification efforts,” said Brian Grenko, CEO and President of VDE Americas. “Solar energy remains the fastest and most cost-effective means for meeting that demand, and VDE Americas is committed to helping our clients develop, construct, finance, and operate these power-generating facilities, while navigating our dynamic regulatory environment.”
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