One Big Beautiful Bill Act (OBBBA)

Understanding the impact to US energy projects

Clean energy policies are changing, particularly in areas like renewable energy development, grid modernization, and supply chain sourcing., Developers and investors will need to reassess project timelines, sourcing strategies, and compliance with evolving tax guidance.

Changes to Clean Energy Incentives Include:

Stricter domestic content requirements and limitations on credit eligibility.

New “foreign entity of concern” (FEOC) restrictions, denying tax credits to projects owned by or sourcing components from certain foreign entities like China, Russia, Iran and North Korea.

In addition, Investment Tax Credit (ITC) projects must now meet escalating domestic preference thresholds to qualify for the bonus adder: 45% if construction started in 2025, 50% in 2026, and then 55% for any construction started after 2026.

More guidance is to follow, once the Treasury Department release safe harbor sourcing tables. 

Termination of certain credits

If you're in solar, wind, or energy efficiency— start your project today and lock in your savings. The following credits are being terminated.

• EV Credits (30D, 25E, 45W, 30C) – credits end by September 30, 2025 except for 30C, which is extended until June 30, 2026.
• Residential Credits (25D, 25C) – credits end by December 31, 2025.
• Energy efficient home credit (45L) – will expire on June 30, 2026
• Commercial Energy Efficient Building Deduction (179D) – terminates for improvements made 12 months after enactment.
• Clean Energy Credits (45Y, 48E) – construction begins by July 4, 2026 and/or is placed in service by December 31, 2027.

Accelerated Phase-Out of Tax Credits

Subject to any changes from guidance issued by Treasury due to the Presidential Executive Order, wind and solar projects that begin construction in 2025 would need to be placed in service before the end of 2029, and wind and solar projects that begin construction after 2025 but on or before July 4, 2026, would need to be placed in service before the end of 2030. Wind and solar projects beginning construction after July 4, 2026, would need to be placed in service before the end of 2027.  

Important note: tax transferability remains for the ITC and PTC.

Shift Toward Emerging Technologies

While traditional renewables face tighter deadlines, technologies like battery storage, carbon capture, and nuclear retain longer-term incentives that run through 2036.  Once again, for the Production Tax Credit (PTC) and Investment Tax Credit (ITC) there are extended phase out of credits to support nuclear, carbon capture, and battery storage.  This includes a 100% of the tax credit for construction that begins through 2032 with phase out beginning in 2033 at 75%.

Important note: tax transferability remains for the ITC and PTC.

We’re ready to help

Unlock the full potential of energy investments requires a forward-thinking approach that balances flexibility, resilience and sustainability. As industries face increasing energy demands, regulatory pressures and the need for around-the-clock uptime, it is critical to rethink how power can be more strategically generated, stored and consumed.

With over a century of expertise, a commitment to innovation, global leadership in cybersecurity and one of the industry’s most expansive US manufacturing footprints, Eaton can help organizations of all sizes navigate the complexities of modernizing energy systems to support long-term operational success. Now is the time to take proactive steps toward upgrading energy infrastructure for the demands of the future.

To learn more, visit Eaton.com/StrongerFuture.