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New US Tax Credit Rules: Triggering Criteria and Exemptions Existing agreements temporarily shielded The final OBBBA text introduces three important exemptions to minimize the disruption for existing contractual and supply chain arrangements, including:
Existing licensing agreements
Existing PFE material supply contracts
Energy storage projects starting before end-2025 For energy storage projects, eligibility for the Investment Tax Credit depends on the construction start date, not the placed-in-service date. Projects that begin construction before 31 December 2025 are exempt from MACR thresholds. Those starting on or after 1 January 2026 must meet escalating sourcing requirements. Currently, BESS projects are still governed by an earlier IRS guidance from January 2025, which defines construction start based on two criteria: 1. Physical Work Test: Requires meaningful physical work to begin onor off-site (e.g. custom equipment manufacturing). 2. 5% Safe Harbor Test: Met when at least 5% of total eligible project costs are incurred through binding contracts or expenditures. On 15 August, the IRS issued updated guidance to restrict the use of the 5% test for large scale solar and wind projects. Although BESS projects are explicitly excluded, similar limitations may be extended at a later stage.
Source: Content & analysis provided by CRU Group (Distinguished Partner). For more information, visit crugroup.com.
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