President Trump yesterday issued an executive order, “Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources” (the “Executive Order”), which could have a major impact on wind and solar energy project development, construction, and finance.
Contexte
President Trump signed into law on July 4 the One Big Beautiful Bill Act (the “Act”), which, among many other changes impacting renewable energy projects, modified the phaseouts for solar and wind projects otherwise eligible for the clean electricity production credit under Section 45Y of the Internal Revenue Code (the “PTC”) and the clean electricity investment credit under Section 48E of the Internal Revenue Code (the “ITC”).
For solar and wind projects, instead of beginning to phase out in 2032 or later based on the Inflation Reduction Act of 2022, the Act instead generally provides that solar and wind facilities are eligible for the PTC or ITC only if placed in service by the end of 2027. There is an exception to this deadline for projects on which construction begins before the one-year anniversary of enactment of the Act. Any such project would, under current beginning of construction guidance, generally still be eligible for the PTC or ITC, as applicable, if placed in service by the end of the fourth calendar year following the year in which construction began.
Executive Order
The Executive Order issued yesterday by President Trump instructs the Secretary of the Treasury within 45 days after passage of the Act to:
prendre toutes les mesures que le secrétaire au Trésor juge nécessaires et appropriées pour appliquer strictement la fin des crédits d'impôt pour la production d'électricité propre et l'investissement au titre des sections 45Y et 48E de l'Internal Revenue Code pour les installations éoliennes et solaires. Il s'agit notamment de publier de nouvelles orientations ou de réviser les orientations existantes si le secrétaire au Trésor le juge approprié et conforme au droit applicable, afin de garantir que les politiques concernant le "début de la construction" ne soient pas contournées, notamment en empêchant l'accélération artificielle ou la manipulation de l'éligibilité et en limitant l'utilisation de mesures de sauvegarde générales à moins qu'une partie substantielle de l'installation concernée n'ait été construite.
The Executive Order also instructs the Secretary of the Interior to review its regulations, guidance, policies, and practices to determine whether any provide preferential treatment to wind and solar facilities in comparison to dispatchable energy sources, and to adjust such practices as needed to eliminate such preferences.
Leading to the passage of the Act, there was some negotiation between certain members of Congress and the Executive Branch about limiting the longstanding beginning-of-construction rules, which are contained in IRS Notices.
It remains to be seen whether and how Treasury will make adjustments to those rules in light of the Executive Order. The Foley team is continuing to monitor developments in respect of the Executive Order, the ITC, and PTC, and will provide updates as available.
