US President Donald Trump has signed an Executive Order (EO) that will ‘eliminate’ federal subsidies for ‘unreliable’ green energy sources such as wind and solar in furtherance of the One Big Beautiful Bill Act (OBBBA) that became a law on July 4, 2025. 

Under the OBBBA, wind and solar energy projects could access clean energy tax credits under the Inflation Reduction Act (IRA) if they start construction within 12 months of the passing of the act, or start generating power by December 31, 2027 (see OBBB On President Trump’s Desk After Final House Passage). 

This would have given some time to developers to safe harbor PV components for their projects and speed up the construction process.  

Now, President Trump has directed the US Department of the Treasury to strictly enforce the termination of the clean electricity production and investment tax credits for wind and solar facilities under Sections 45Y and 48E of the Internal Revenue Code. It has been asked to ‘build upon and strengthen the repeal of, and modifications to, wind, solar, and other “green” energy tax credits’ in the OBBBA.

As per the EO, the Treasury will issue new and revised guidance to ensure that the policies concerning the ‘beginning of construction’ are not circumvented ‘including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.’

The Treasury has also been directed to implement the enhanced Foreign Entity of Concern (FEOC) restrictions, each as identified in the OBBBA.

Additionally, the Department of the Interior (DOI) has been directed to revise regulations and policies to eliminate preferential treatment for wind and solar facilities. It is expected to promote ‘reliable, dispatchable energy sources’ – defined as nuclear, fossil fuels, and other emerging technologies – in permitting, regulation, and federal support programs.

Both the Treasury and the DOI will submit a report listing their findings, actions taken and planned to be taken to implement this Executive Order, to the President within 45 days of the EO, or by August 18, 2025.

“Reliance on so-called “green” subsidies threatens national security by making the United States dependent on supply chains controlled by foreign adversaries,” reads a statement from the White House. “Ending the massive cost of taxpayer handouts to unreliable energy sources is vital to energy dominance, national security, economic growth, and the fiscal health of the Nation.” 

Abigail Ross Hopper, the President and CEO of the Solar Energy Industries Association (SEIA), said that the association is analyzing the potential implications of the order and will continue to make the case for industry that business certainty, predictability, and even-handedness are bedrocks of federal policy that cannot be undone by the stroke of a pen. 

So what happens next? 

Things are not looking pretty for sure, mainly with the administration planning to rewrite the ‘commence construction’ rules. Under the current rules, developers have 4 years to place a project in service once it qualifies for safe harbor under Sections 45Y and 48E. The Treasury could reduce this time period, which means developers who previously banked on multi-year build-outs would lose their eligibility mid-project, according to an assessment prepared by consulting firm Advanced Energy Advisors, headed by the former SEIA boss Rhone Resch. 

If a project stalls midway, its tax credit status could be revoked retroactively. 

Resch says the potential FEOC expansion measures may include reducing the foreign ownership of an entity or a board control room from 25% now to 10%. Expanding the beneficial ownership and upstream entity rules may cover component suppliers, subcontractors, or raw material sources for polysilicon or wafers, etc. If a US solar developer uses modules with wafers made in China, they may lose credit eligibility regardless of the ownership, and the Treasury could issue a blacklist for materials and suppliers. 

The consultancy also fears retroactive enforcement of the new FEOC rules, which could negatively impact projects that were safe harbored between 2022 and 2024, or those that are under construction or permitted but not completed. 

According to an article by Ben Golin from the University of Nevada’s School of Law in Jurist News, the EO is likely to be challenged by energy companies, environmental groups, and affected states. 

Golin adds that challengers have 2 legal avenues. The first could be related to the violation of the World Trade Organization’s rules or bilateral trade agreements if the order targets specific countries or creates barriers to international commerce. The second option could be that the Interior Department’s mandate to eliminate preferential treatment for wind and solar facilities may be challenged under the Administrative Procedure Act, which allows courts to hold agency actions unlawful if they are deemed ‘arbitrary’ or ‘capricious’. 

Meanwhile, in a LinkedIn post, Michael Thomas of Cleanview cautioned, “That could bring a whole new wave of project cancellations. And it could threaten to destabilize the power grid given how much we need new power supply.”