The Investment Tax Credit (ITC) has already evolved in 2025, and there are important questions about its future with the new Trump administration now in office. The ITC remains a critical driver for creating strong internal rates of return (IRR) for commercial solar projects. Questions we are hearing from our clients include:
Representing top commercial real estate (CRE) companies nationwide, SolarKal experts are here to offer practical advice on navigating potential political, regulatory, and policy changes. We’ll explore what you can do now to safeguard your solar investment strategies and maximize returns. The information provided in this blog is intended as a general guideline for commercial solar projects. SolarKal is not a tax advisor, and this content should not be considered tax, legal, or financial advice. Always consult a qualified tax professional regarding your business's specific circumstances.
Join our webinar, “Navigating the Solar ITC: 2025 Strategies for Commercial Real Estate Owners,” on February 13, 2025, at 11:00 a.m. EST, featuring Lynn Mucenski-Keck, federal tax policy leader at Withum Advisors. Register Now!
Beginning January 1, 2025, the governing Section 48 of IRS tax code became Section 48E. The ITC as we know it is now officially called the Clean Electricity Investment Credit, or the tech-neutral Investment Tax Credit. This update adds more technologies to the list of covered energy generation types:
Among these technologies, solar energy stands out as the most accessible and economically beneficial option. Our commercial real estate clients recognize its compelling advantages—boosting revenue and property value, cutting emissions, and ensuring a reliable energy source for operations and tenants. Additional benefits include:
Grandfathering rules are intended to safeguard commercial real estate owners by preserving the benefits promised to projects that have already begun and ensuring those benefits remain intact even if the rules change. For example, a solar project that is installed and in operation in 2025 would likely remain eligible for the ITC under the prevailing IRA provisions of 2025, even if those provisions were later modified.
To lock in eligibility under current ITC rules, a project must have “begun construction” under those rules.
Construction start is defined by the IRS typically through one of two tests:
Safe harbor protects projects that have met key criteria from being negatively affected by subsequent policy changes.
The ITC has long been a cornerstone of solar energy incentives, providing stable and reliable support for project developers and commercial real estate owners alike. Its consistency over the years has played a pivotal role in driving solar adoption and investment. With the passage of the IRA, the ITC is not only extended but also expanded, ensuring continued financial predictability and creating new opportunities for solar projects well into the future.
On January 20, President Trump issued executive actions with potential implications for solar decisions.
The "Unleashing American Energy" Executive Order directs federal agencies to pause disbursing funds from the IRA and Infrastructure Investment and Jobs Act (IIJA). Over the next 90 days, agency heads will review grant, loan, and funding processes to ensure alignment with a new energy strategy. Reports with findings and recommendations will be submitted to the National Economic Council (NEC) and Office of Management and Budget (OMB).
Fortunately, initial indications suggest that the ITC, vital for commercial solar economics, is unaffected. The executive order targets loans and grant funding rather than the ITC, and changes to the credit itself would likely require congressional action and take effect no sooner than 2026. While the order temporarily halts new funding approvals, existing distributed funds are not expected to be impacted.
It’s worth noting that this pause may be largely symbolic, as an estimated 93% of IRA funds have already been allocated. However, delays could affect upcoming projects and create uncertainty for recent grant recipients.
For a quick breakdown on this, check out "The Durability of the IRA" blog.
Embarking on a commercial solar project is a strategic move that can yield substantial long-term benefits. Our project delivery team is communicating that it’s urgent to start now. Our firsthand experience with over 100 completed and active projects shows that the preliminary stages — particularly permitting and interconnection — can be very time-consuming.
The duration for obtaining necessary permits varies significantly based on location and project complexity. Industry research indicates that a typical photovoltaic (PV) permit process averages around 50 days. However, in our vast experience, it can extend much longer, depending on the utility jurisdiction processes and backlog.
Connecting a new commercial solar system to the electrical grid requires a separate interconnection approval from the utility company. Large commercial projects can take from 6 to 14 months to receive this critical approval, depending on the specific utility and regional regulations.
Delays in these stages can impact your timeline and potentially your financial returns if tax policies change before your project begins.
Considering these factors, the entire process — from initial application to final grid connection — can span several months to over a year. So, it is crucial to start now to avoid delays in permitting and interconnection that not only postpone the construction start date but can potentially impact the financial returns of the project if there are changes to the tax policies.
Given these timelines, commercial real estate owners must act quickly to secure their projects under current ITC rules and avoid potential future disruptions. With deep expertise across more than 100 completed and active projects, SolarKal’s Advisors have refined a proven process to navigate every challenge which may arise in large commercial solar projects—reducing delays, optimizing efficiency, and maximizing returns.
Contact a SolarKal Advisor today to take full advantage of current tax credits and incentives. Don’t wait — start planning your solar strategy now to safeguard your investments and secure your competitive edge.
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