Navigating OB3, New Construction and FEOC Rules, and Why It’s Business as Usual for Sunwealth
The clean energy industry has seen no shortage of headlines this summer. On July 4, President Donald Trump signed the OB3 Act into law, scaling back certain incentives from the Inflation Reduction Act and leaving a clear — if narrowing — window for solar and storage projects to qualify for the Investment Tax Credit (ITC). Then, on August 15, the Treasury Department issued Notice 2025-42, which updated how developers determine the beginning of construction for projects seeking tax credits.
At first glance, these updates may feel like seismic shifts. But for Sunwealth and our partners, they reinforce something we’ve known all along: with the right projects, the right scale, and the right experience, it’s still business as usual.
OB3: A Defined but Actionable Runway
The OB3 Act sets clear timelines for solar and storage projects:
• Projects that start construction before July 4, 2026 generally have four years to be placed in service.
• Projects that do not start construction by then must be placed in service by December 31, 2027 to qualify.
• Storage projects have until 2033 to begin construction and still claim the ITC.
For investors, this creates urgency but also clarity: there is a defined window in which to structure ITC-qualified investments. Execution and timing will be essential.
New Construction Start Rules: Big Change, Small Impact for Sunwealth
Treasury’s new guidance eliminates the familiar 5% safe harbor for most solar projects above 1.5 MW, requiring developers instead to demonstrate “physical work of a significant nature” under the Physical Work Test.
Here’s the good news: nearly all of Sunwealth’s projects are under 1.5 MW. That means we can continue to rely on the 5% safe harbor or the Physical Work Test — proven, reliable frameworks for qualifying projects under the ITC.
The guidance does not yet address Foreign Entity of Concern (FEOC) restrictions, with further updates expected by year-end. What is clear is that the full set of FEOC restrictions applies only to projects that begin construction on or after January 1, 2026 — shielding projects that start construction by the end of 2025. While final rules are still pending, our expectation, informed by industry dialogue, is that FEOC requirements are unlikely to materially change for solar projects under 1.5 MW.
For us, the strategy is clear: safe-harbor as many projects as possible before year-end and continue to do so once FEOC guidelines are finalized, all the way through the July 4, 2026 deadline.
The Investor Opportunity: Stable, Strategic, and Impactful
While policies shift, the fundamentals remain unchanged:
• Electricity demand is rising — driven by AI, electrification, and economic growth.
• Distributed solar+storage is proven — affordable, reliable, and critical for grid stability.
• The ITC remains a powerful tool — helping investors reduce tax liability while accelerating clean energy deployment.
For banks and institutional investors, solar tax equity continues to offer:
• Stable, predictable returns that help hedge against market volatility.
• Strategic tax benefits and potential Community Reinvestment Act (CRA) credits for banks.
• Impactful investments that support resilient energy infrastructure and community growth while supporting long-term investment goals.
Sunwealth: Built for This Moment
Sunwealth was built to deliver value in times like these — when policies evolve but demand and fundamentals remain strong. By focusing on high-quality, community-based commercial solar+storage projects, we are able to act quickly, safe-harbor projects efficiently, and offer investors opportunities that are resilient, measurable, and impactful.
The rules may be changing, but the opportunity hasn’t. For investors ready to put capital to work in a reliable and stable investment structure, the case for solar tax equity is as strong as ever. If you're looking to invest in the future of solar+, Sunwealth would love to hear from you.