Understanding the One Big Beautiful Bill Act (OBBBA) and How Baker Electric Can Help

The recently passed One Big Beautiful Bill Act (OBBBA) introduces significant changes to the federal tax credit landscape for renewable energy projects. For developers, property owners, and businesses considering solar, battery storage, or hybrid systems, understanding the new rules is critical to maximizing financial returns and ensuring compliance.

 

Key Provisions of the OBBBA

 

Investment Tax Credit (ITC) Eligibility

The OBBBA outlines strict timelines for projects to qualify for the full 30 percent ITC:

• Projects that begin construction by July 4, 2026, and are placed in service by the end of the fourth calendar year are eligible for the full credit.
• Projects that begin after July 4, 2026, must be placed in service by the end of 2027 to qualify.
• There is no phase-out or partial credit. Projects that miss these deadlines receive zero percent ITC.

Battery Energy Storage Systems (BESS)

Standalone battery storage projects remain eligible for the 30 percent ITC through 2033. However, beginning in 2026, these projects must comply with Foreign Entity of Concern (FEOC) restrictions, which limit the use of components sourced from certain countries.

Construction Commencement Requirements

To qualify for the ITC, projects must meet the IRS’s construction commencement rules:

• The Physical Work Test is the primary method for proving construction has started, particularly for systems over 1.5 MWAC.
• Smaller projects may also use the Five Percent Safe Harbor rule.
• Projects must maintain continuous physical work to satisfy the Continuity Requirement, with allowances for certain delays such as permitting or weather.

Bonus Depreciation

The return of 100 percent bonus depreciation provides an additional financial incentive, allowing businesses to accelerate the recovery of project costs.

FEOC Compliance and Domestic Content

Starting in 2026, projects must avoid using materials from countries designated as Foreign Entities of Concern, including China, Russia, Iran, and North Korea. The thresholds for domestic content will increase annually through 2030, making early planning and sourcing strategies essential.

 

Planning Ahead: Three Scenarios to Consider for Solar

Timing matters. Here are three common starting points and how they affect ITC eligibility under the OBBBA:

Scenario 1: Starting Today
Projects that begin construction now have the most flexibility. They qualify for the full ITC and have until the end of the fourth calendar year to be placed in service. This window allows for thoughtful planning, permitting, and procurement.

 

Scenario 2: Starting January 1, 2026

These projects still have the same flexible construction window as Scenario 1 (until the end of the fourth calendar year to be placed in service). However, FEOC restrictions will now be in effect, so sourcing must be complaint.

 

Scenario 3: Starting July 4, 2026
Projects starting on or after July 4, 2026 must be placed in service by December 31, 2027 to receive the ITC and FEOC will be required. There is no grace period beyond this deadline. These projects will require accelerated schedules and strict adherence to compliance standards.

 

How Baker Electric Supports Your Project

Baker Electric is uniquely positioned to help clients navigate the complexities of the OBBBA. Our team brings deep expertise in renewable energy policy, project development, and compliance. We provide:

• End-to-End Project Delivery: From feasibility studies and engineering to procurement and construction, we manage every phase with precision and transparency.
• Strategic Planning: We help clients model construction timelines and financial scenarios to optimize ITC eligibility and bonus depreciation benefits.
• Sourcing and Compliance Support: We assist in selecting materials that meet domestic content and FEOC requirements, reducing risk and ensuring long-term viability.
• Schedule Management: Our experienced project managers work to align construction milestones with IRS requirements, helping you meet critical deadlines.

 

Partnering for a Clean Energy Future

The OBBBA represents a pivotal moment for clean energy investment. With the right partner, businesses can take full advantage of the incentives while avoiding costly missteps. Baker Electric is committed to helping clients build smarter, cleaner, and more resilient energy systems.

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Let’s Talk About What’s Next

Whether you’re trying to preserve tax benefits, pivot into storage, or simply understand what’s still possible, our team is ready to help you move forward.

Let’s build what comes next. Together.