The Internal Revenue Code allows renewable-energy developers to secure the 30% Investment Tax Credit (ITC) by establishing “Start of Construction” (SoC) before July 4, 2026. Two pathways are available to meet SoC requirements:
- Physical Work Test: This pathway begins when “physical work of a significant nature” starts, often achieved through the “100-hour work” strategy for substation-heavy projects. The “100-hour work” strategy involves bespoke engineering and fabrication of components like radiators, conservator tanks, and magnetic cores. All work must be documented with time-stamped factory photos, design drawings, and QA logs.
- 5% Safe Harbor: This pathway can be satisfied when at least 5% of total project costs are incurred before the deadline, typically through purchase orders and progress payments.
Both pathways preserve the full 30% ITC, provided projects demonstrate continuous progress until commercial operation with meticulous record-keeping.
As it pertains to the OBBBA, the previous July 2026 deadline established by the IRA remains unchanged. This gives developers an 18-month window to act, but with heightened compliance demands.
The regulatory landscape for securing the 30% Investment Tax Credit (ITC) is expected to become more stringent, with new requirements reshaping compliance strategies. The July 7, 2025, Executive Order directs the Treasury and Department of Energy (DOE) to issue guidance tying safe-harbor eligibility to stricter milestone enforcement and early audit procedures. This could lead to significant changes, such as the Physical Work Test, which would require a higher labor-hour threshold beyond the current “100-hour work” strategy. The 5% Safe Harbor cost threshold may also increase to 10–15%, raising the financial commitment needed to qualify.
The Buy America requirements also impose stricter standards for projects claiming domestic-content credit enhancements. Under Buy America, developers must verify that components like steel, iron, and electrical equipment are U.S.-produced, adhering to escalating domestic-content percentage targets and avoiding sourcing from foreign entities of concern.
Maintaining the July 4, 2026 deadline while complying with these changes elevates the compliance burden, meaning that proactive planning and robust documentation will be essential for preserving ITC eligibility.
EPE’s Compliance Assessment
EPE offers a comprehensive solution to navigate these complexities and protect ITC value. We can lower your risk involved in this transition process through a compliance assessment. In this assessment, our team of experts reviews all project records and schedules, confirms that current activities still satisfy SoC definitions, benchmarks interconnection obligations against tax credit milestones, and runs a procurement gap analysis that flags noncompliant vendors or missing flowdown clauses.
Our team then validates supplier certifications, builds a traceability dossier ready for IRS or DOE audit, and compares the project’s QA/QC processes with best practices drawn from more than 5 GW of successfully financed renewables and BESS assets.
Our team is then able to deliver a concise Compliance Assessment Report, which ensures that technical choices, construction sequencing, and funding strategies remain fully synchronized with the evolving ITC, OBBBA, and Buy America requirements — protecting both schedule and tax credit value."
With the July 2026 deadline approaching, use the form below to contact EPE and discuss how our team can help safeguard your project’s ITC eligibility and streamline compliance.
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