The One Big Beautiful Bill (OBBB) passed by congress in July of 2025 made significant changes to the Federal Solar Investment Tax Credits (ITC), one of the most valuable financial benefits to businesses that install solar. Under previous law, commercial solar projects could lock in the 30% ITC for many years to come, After the OBBB, that window sharply narrowed, and a number of restrictions and time limits to the ITC were introduced.
This discussion will focus on commercial projects not residential, which have a very different set of restrictions. Under the new commercial rules, system sizes under 1.5MW(AC) have two key milestones to consider. If a project meets safe harbor requirements, which means investing a minimum of 5% of the project cost (some restrictions apply to what is considered part of the 5%), prior to July of 2026, the project has until the end of 2030 to be completed. If the safe harbor requirement is not achieved then the project has until the end of 2027 to be completed. The compressed timeline makes prompt planning and execution critical to secure the full benefit.
The OBBB does benefit standalone battery storage systems, which now qualify for the same tax incentives as solar even when not paired with a PV array.
The OBBB added a new layer of rules, effective January 2026, the Foreign Entities of Concern (FEOC) restrictions. FEOC limits the ITC eligibility for solar projects based on the percentage of materials that come from certain countries. Projects that have a significant “material assistance” from countries like China, Russia and North Korea have limited access to tax credits. The rules are complex and archaic so we’ll leave that for the legal professionals.
There are other bonus incentives beyond the 30% ITC:
Domestic Content Bonus requires a percentage of U.S. manufactured components which can earn an additional 10%. This credit is a powerful incentive for businesses to support U.S. manufacturing while investing in solar projects. This includes using 100% U.S. made steel, as well as an increasing percentage of U.S. components including PV cells, inverters and racking.
Energy Community Bonus provides an additional 10% for projects in designated brown field or former fossil fuels zones.
100% Bonus Depreciation still qualifies for the 100% first year depreciation which significantly improves cash flow and ROI.
The changes to the Federal solar ITC program have forced many developers to hasten their projects. Hawaii Pacific Solar has benefited from the OBBB due to the new urgency it created in the marketplace. Projects that have lingered through redesign, engineering and value engineering have now moved quickly to interconnection with HECO, as well as DPP permits. Some developers have opted to purchase equipment in advance of traditional critical path tasks like approvals from government AHJ and utility, thereby locking in the safe harbor. We expect the next few years to be very busy given these new restrictions.
It remains to be seen what will happen at the end of the ITC in late 2030. If not amended by a new administration and congress, commercial installation may go the way of residential and significantly curtail new projects. The Hawaii tax credit has not changed and perhaps it can be enhanced given the Federal restrictions. Our industry has faced many headwinds over the years with tariffs, changes to ITC, interconnection challenges and material shortages and yet has weathered these setbacks. Let hope it can maneuver through these changes as well.
By Bob Johnson, CEO & president, Hawaii Pacific Solar