US developers could safe-harbor 216 GW DC to 240 GW DC of solar modules before July 4, 2026, according to Wood Mackenzie
Policy changes, including IRS guidance and FEOC rules, are forcing developers to adjust strategies to secure tax credit eligibility
Supply chain constraints, tariffs, and tight development timelines could still prevent some projects from meeting ITC deadlines
US solar developers are rushing to lock in Investment Tax Credits (ITC) under the Inflation Reduction Act (IRA), with Wood Mackenzie forecasting that they could safe-harbor between 216 GW DC and 240 GW DC of solar modules before the July 4, 2026, deadline.
Analysts believe developers have been indulging in an ‘unprecedented wave’ of safe harboring solar modules since mid-2024. This is enough to meet forecasted installations through the end of the decade, says Wood Mackenzie in its The state of safe harboring: A strategic outlook for US utility-scale solar development insight.
Under the Trump administration’s One Big Beautiful Bill Act (OBBBA), passed on July 4, 2025, 30% clean energy tax credits under the IRA will be available only to those solar and wind energy projects that enter construction within 12 months of the passing of the act or are placed in service by December 31, 2027. Meeting this deadline will give them 4 years to complete their projects and still qualify for 30% ITC (see Wood Mackenzie Cuts 10-Year US Solar Outlook By 17%).
Fresh policy challenges have cropped up since then, forcing developers to constantly navigate the policy landscape. This includes an Internal Revenue Service (IRS) notice eliminating the use of 5% safe harbor method for projects larger than 1.5 MW AC after September 2, 2025. They pivoted to proving continuous construction on site under the Physical Work Test. The Foreign Entity of Concern (FEOC) guidance also forced them to pivot on short notice.
Yet, Wood Mackenzie underlines the challenges they continue to face even with the safe harbor. Projects must continue meeting IRS requirements, including spending thresholds, continuous construction, and FEOC rules. Delays in financing, equipment supply, and interconnection could also cause some projects to miss the July 4, 2026, start-of-construction deadline, potentially lowering the final safe-harbored capacity.
Meeting the December 31, 2027, deadline is also not easy, as developers may face challenges related to long transformer lead times, limited labor availability, interconnection delays, and potential module supply constraints due to FEOC rules (see US Treasury Tightens Clean Energy Tax Credit Eligibility Under FEOC Guidance).
New potential tariffs from the AD/CVD investigation on solar cells from India, Indonesia, and Laos, along with the Section 232 investigation on polysilicon and derivative products, may also pose new challenges (see Wood Mackenzie Calls Section 232 US Solar’s Biggest Challenge).
“As a result, developers beginning construction after mid2026 are unlikely to rely on the ITC unless they are exceptionally advanced in permitting, design, procurement, and interconnection well before hitting the deadline,” note the analysts.
There may be market consolidation on the anvil for smaller developers that lack these capabilities or are unable to safe-harbor projects.
For now, the ITC remains critical for solar economics, but going forward the industry’s growth will be underpinned by accelerating electricity demand and the need for new power generation capacity, stressed Wood Mackenzie. A recent Anza Renewables report shows the impact of policy dynamics on solar and storage pricing in the US (see Anza: Policy Moves Influencing & Reshaping US Solar Pricing).
Earlier this year, Wood Mackenzie and CohnReznick forecast the US to add 197 GW DC of utility-scale solar between 2025 and 2030 under the base case, with a 16% to 18% downside risk based on further policy changes (see Policy Shifts Reshape US Solar, Storage Economics).
