Background on Renewable Energy Credits: The court ruling marks a win for renewable energy supporters. However, it arrives shortly before the deadline to phase out credits under the Republicans’ “Big Beautiful Bill”. The One Big Beautiful Bill Act of the previous year imposed restrictions: tax credits for solar and wind energy would only be available if projects begin construction before July 5, 2026, or are operational before 2028.
Key Issue in the Case: The IRS definition of “starting construction” was central to the case. Since 2013, the IRS recognized two methods for projects to commence: starting “physical work of a significant nature” or incurring costs of five percent or more of a project’s total cost. The Trump administration’s guidance only included the “physical work” method, disregarding the five percent option.
The Court’s Decision: D.C. federal Judge Colleen Kollar-Kotelly found the exclusion of the five percent cost pathway arbitrary and capricious. She struck down the Trump administration’s guidance. Kollar-Kotelly acknowledged existing uncertainty due to the upcoming deadline on when construction should begin.
Remaining Uncertainty: Despite the ruling, Judge Kollar-Kotelly indicated in her decision that renewable energy developers still face uncertainty regarding investment decisions in wind and solar projects, given the nearing July deadline.
Rachel Frazin from The Hill reports on the policies affecting oil, gas, and new supply chains. The Hill Insider subscription service, launching in July 2026, promises early access to stories before they become news.
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