The clock is ticking. The rules have changed. The prize—tens of millions in federal tax credits—is about to disappear for any renewable energy project that isn't laser-focused on compliance and speed.
Thanks to the "One Big Beautiful Bill Act" (OBBBA), the generous clean energy incentives that have fueled the solar and wind boom are facing an accelerated sunset. We're not talking about a gentle phase-out; we're talking about a hard stop that could wipe out a project's financial viability overnight.
🛑 Key Takeaways: The Two "Begin Construction" Cliffs You Must Clear
The current atmosphere requires developers to shift their mindset from "getting in line" to "proving commencement." Simply applying for interconnection is not enough; the IRS demands proof of Begin Construction (BOC) to secure your tax credits.
1. The Interconnection Queue is NOT "Begin Construction"
It is absolutely vital for every developer, financier, and legal counsel to understand this core tax principle: simply being in an RTO/ISO interconnection queue or having a signed interconnection agreement does not satisfy the IRS requirement to "Begin Construction" (BOC). Interconnection studies, permitting, and applications are considered preliminary activities.
To secure your tax credit extension, you must satisfy an IRS-approved method of establishing BOC, which, for most large projects, now requires:
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The Physical Work Test: Performing physical work of a significant nature on the project site or at a manufacturing facility. (The work must be more than preliminary.)
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The 5% Safe Harbor: (Incurring 5% of total project cost), which is now heavily restricted and unavailable for most utility-scale wind and solar projects.
2. The Two Non-Negotiable BOC Deadlines
To avoid termination and compliance complexity, your projects must clear two separate but related "Begin Construction" cliffs defined under the OBBBA:
- December 31, 2025 Deadline:
- Begin Construction (BOC) by this date. This is the FEOC Compliance Cliff. Projects that BOC after this date are subject to the first phase of the restrictive Foreign Entity of Concern (FEOC) sourcing rules. Missing this date introduces immediate, complex, and high-risk compliance burdens for procurement.
- July 4, 2026 Deadline:
- Begin Construction (BOC) by this date. This is the Tax Credit Survival Cliff. Projects that fail to BOC by this date lose the four-year construction safe harbor and must be fully Placed in Service (operational) by December 31, 2027. This is an effectively impossible deadline for large projects, leading to a total loss of the tax credit.
💥 1. Feasibility: Don't Race to the Wrong Finish Line
In a rush to secure a BOC date, many developers risk cutting corners on Feasibility and due diligence. That's a mistake that turns a 30% tax credit into 100% debt on a project that can't be built.
The Pitfall: The "Just Start Digging" Mistake
Rushing to lay down a fence or clear a corner of land to claim a BOC date, only to find later that wetlands, endangered species, or massive grid upgrade costs make the project non-viable. You've wasted time, capital, and a precious BOC window.
The Fix: Zero-Tolerance Due Diligence
WATT Consultants' Feasibility process acts as your Deadline Insurance. We rapidly perform the high-stakes checks (like environmental screens and initial site engineering) before you execute the Physical Work Test. This ensures the site is not just possible, but financeable and constructible, making the entire race worth the effort.
🌊 2. Interconnection: Winning the Grid Gauntlet
Interconnection is the single longest, most unpredictable bottleneck in renewable energy development. With every developer racing for the 2026 BOC deadline, the utility queues are about to become a traffic jam from hell.
The Pitfall: The Wait-and-Hope Strategy
Developers wait for the utility to complete lengthy grid studies, not realizing that a 2-year queue time leaves them zero margin for error to start construction before the deadline.
The Fix: Aggressive Queue Management
WATT Consultants' Interconnection experts treat the utility process like a parallel, mission-critical sprint. We specialize in:
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Proactive Study Management: Aggressively pushing utility deliverables and mitigating study delays.
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Cost Certainty: Identifying potential grid upgrade costs early on to avoid last-minute financial shocks that derail financing and cause you to miss the BOC deadline.
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Optimal Strategy: Selecting the right interconnection method to get your project legally "in line" for its critical approval.
🛡️ 3. Compliance: Eliminating the Audit Risk
The urgency to meet the July 4, 2026, BOC deadline is the number one cause of compliance failure. If the IRS finds one mistake in your documentation, your entire tax credit can be disallowed.
The Pitfall: The Missing Paperwork
For large projects, the 5% Safe Harbor is gone. You must satisfy the Physical Work Test, which requires meticulous proof that the work is significant in nature and continuous. Preliminary site work (surveys, fencing) is often excluded, leading to a rejected BOC claim.
The Fix: IRS-Defensible Documentation
WATT Consultants' Compliance team is your dedicated auditor. We manage the "Begin Construction" documentation process, creating an audit-proof record that tracks:
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The exact nature and timing of the Physical Work Test.
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Adherence to the new Continuity of Construction rules.
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Compliance with Prohibited Foreign Entity (PFE) / FEOC restrictions—critical for projects aiming to BOC after December 31, 2025.
🏁 4. Project Management: The Conductor of the Chaos
The problem is no longer technical; it's orchestrational. You can't simply fast-track one area; you must accelerate all of them at once while staying compliant.
The Pitfall: Siloed Development
Leaving legal (PPA/Financing), engineering, and procurement to work in separate silos guarantees a missed deadline. A bottleneck in one area (like permitting) crushes the timeline for every other area.
The Fix: Integrated, Accelerated Execution
The WATT Consultants Project Management team is the conductor of this high-speed symphony. We are the single source of truth that coordinates:
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Financing closing to coincide with the BOC date.
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Engineering releases to support the Physical Work Test.
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Procurement to comply with FEOC rules and delivery timelines.
We eliminate the chaos and ensure that every single resource is aligned to meet the July 4, 2026, finish line in a compliant, financeable way.
The Final Call to Action
The final clock is ticking on the most valuable federal incentives for wind and solar. This isn't a time for uncertainty—it's a time for strategic, professional action. Don't risk millions on a missed deadline or a compliance error.
Contact WATT Consultants today for a comprehensive Deadline Readiness Assessment and secure your project's financial future before the final sunset.
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