10/07/2025
US President Donald Trump has signed an Executive Order (EO) officially halting federal subsidies for green energy sources such as wind and solar, which are considered "unreliable". This measure is an important component of its implementation, known as the One Big Beautiful Bill Act (OBBBA), which officially came into effect as law on July 4, 2025.
Tightening of clean energy tax credits or retroactive disqualification
In the original OBBBA terms, eligible wind and solar projects can continue to enjoy clean energy tax credits under the Inflation Reduction Act (IRA), as long as they start construction within 12 months after the bill is passed or achieve grid connected power generation before December 31, 2027. This originally helped developers to purchase key components in advance and accelerate project construction through the "Safe Harbor" mechanism.
However, according to the latest executive order, Trump has requested the US Treasury Department to strictly enforce the termination of clean power production and investment tax credits under sections 45Y and 48E of the Internal Revenue Code. The Ministry of Finance is required to establish and strengthen the abolition and adjustment of tax credits for OBBBA wind, solar, and other green energy.
At the same time, the Ministry of Finance is required to strengthen restrictions on Foreign Entity of Concern (FEOC) in accordance with the OBBBA.
Cancel the preferential status of renewable energy and instead support nuclear and fossil energy
The US Department of the Interior (DOI) has also been instructed to revise relevant regulations and policies, remove the "preferential status" of wind and solar projects in approval, regulation, and federal support programs, and prioritize "reliable and dispatchable energy" such as nuclear energy, fossil fuels, and other emerging technologies.
The Ministry of Finance and the Ministry of the Interior shall submit a report to the President within 45 days after the issuance of the executive order (i.e. before August 18, 2025), listing their investigation results, actions taken to implement this executive order, and planned actions.
The White House stated in a statement that "green subsidies threaten national security by subjecting the United States to foreign adversaries in the supply chain." The statement also noted that "ending large-scale financial support for unreliable energy is key to achieving energy dominance, national security, economic growth, and fiscal health
The subsequent development mainly depends on how the government redefines the rule of "starting construction". According to current regulations, developer projects that meet the safe harbor conditions stipulated in Articles 45Y and 48E are eligible for a construction period of 4 years.
The conditions for "foreign entities of concern" may be further tightened, and projects that have already started construction still face the risk of canceling tax incentives
Abigail Ross Hopper, President and CEO of the Solar Energy Industry Association (SEIA), responded that the association is evaluating the potential impact of the executive order and stated that the certainty, predictability, and fairness of federal policies are the foundation of industry development and should not be overturned by a single order.
The consulting firm Advanced Energy Advisors (led by Rhone Resch, former chairman of SEIA) has warned that if the Ministry of Finance shortens the current four-year safe harbor period, many projects originally planned to be completed in a few years may be disqualified midway. If the project is stalled during construction, projects that have already enjoyed tax credits may also be retrospectively deprived of tax benefits.
Rhone also stated that the new executive order may further tighten the definition criteria for "entities of foreign concern," lowering the threshold for foreign ownership or control from the current 25% to 10%, and expanding the regulatory scope for upstream suppliers, subcontractors, and raw material sources. Even if the component manufacturer is a US funded enterprise, as long as it uses silicon wafers from China, the project may still lose its eligibility for credit, and the Ministry of Finance may issue a "blacklist" mechanism.
The agency is also concerned that the new regulations concerning foreign entities may be retroactively applied to projects that have been included in the safe harbor between 2022 and 2024, or projects under construction but not yet completed.
New policies may trigger multiple complaints
Ben Golin from the University of Nevada Law School wrote in Jurist News that the executive order is highly likely to trigger challenges from renewable energy companies, environmental organizations, and affected state governments.
Golin's analysis suggests that there are two potential legal avenues: one is that if an administrative order targets a specific country or creates trade barriers to international trade, it may violate WTO rules or bilateral trade agreements; Secondly, if the Ministry of the Interior cancels preferential treatment for wind and solar power projects, it may be deemed "arbitrary or capricious" under the Administrative Procedure Act, and thus be judged illegal by the court.
Michael Thomas from Cleanview, a clean energy trading tracking platform, warned in a LinkedIn post that "this policy could trigger a new wave of project cancellations and could threaten grid stability, especially in the current context of the urgent need for new electricity supply in the United States
Learn more：
www.ytsolarsystem.com
