Overview of the newly enacted changes to the solar industry by the OBBB

Section 25D

• The credit will not apply to expenditures made after December 31, 2025 for residential projects. 

What this means: Advise your sales team to push 25D as much as possible to get your pipeline through the end of the year built out.

Note – we will still have the 25% SC state solar credits available which is better than many other states.

Sections 45Y/48E

• For solar facilities that begin construction (pursuant to existing IRS guidance) after the date that is 12 months after enactment, 45Y and 48E are subject to a placed in service deadline of December 31, 2027. 

• The placed in service requirement does not apply to energy storage projects.

• There is no ban on third party financed home solar solutions. 

• Domestic content bonus credit 

• Fixes the drafting error made in the IRA for the domestic content bonus credit under 48E (projects that begin construction after June 16, 2025, will be subject to the 45% adjusted percentage to obtain the domestic content bonus, with annual increases thereafter). 

What this means: 48E has a little more runway.  The issue is that we don't have any viable lease options in SC so either members focus on the GA market for volume or we need to start working on the PSC to get some options.  A prepaid lease option would play incredibly well and is still very consumer friendly. 

Section 45X

• For integrated component production, an eligible component manufactured and integrated into another eligible component must be manufactured at the same facility, and the end component must be sold to an unrelated person and contain not less than 65% direct material costs attributable to domestic content. 

• Changes to the definition of “battery module.” 

• Phase out for critical mineral production beginning in 2031. 

 Excise Tax

• There are no new excise taxes on solar projects.

What this means: Interestingly no one seems to know who actually inserted the excise tax into the Senate bill. Fortunately it was removed in the final version.

FEOC Restrictions for 45Y/48E/45X

• Beginning in taxable years after enactment, no specified foreign entity or foreign-influenced entity can claim a 45Y/48E or 45X credit. 

  • Existing IRS guidance on beginning of construction is codified for purposes of applying these restrictions 

What this means: For projects that begin construction after December 31, 2025, and for eligible components sold in 2026 and later, taxpayers cannot receive “material assistance from a prohibited foreign entity”  

This will particularly impact the commercial and utility sectors. See the link below for the specific wording.

https://www.whitehouse.gov/presidential-actions/2025/07/ending-market-distorting-subsidies-for-unreliable-foreign%E2%80%91controlled-energy-sources/