Quarterly Considerations – Q2 2025: OBBB Edition

The One Big Beautiful Bill (“OBBB”) Act was signed into law on July 4, 2025, introducing a range of policy changes that affect U.S. clean energy incentives and the financing structures that support them. While the legislation is now in effect, its full market implications will likely take time to unfold. Adding to the evolving landscape, an Executive Order issued on July 7th directs the Treasury Department to release updated guidance on start-of-construction rules within 45 days.

CRC-IB is actively monitoring these developments and assessing their potential impacts in real time. The perspectives outlined below reflect our interpretation of the legislation, informed by our 15-year track record advising clients through evolving policy landscapes. As the #1 North American Energy Transition & Renewables Financial Advisor1¹, CRC-IB is uniquely positioned to navigate this new framework and deliver tailored, value-driven solutions. Our team stands ready to support your strategic objectives and optimize financial outcomes.

OBBB Key Takeaways

The OBBB reshapes clean energy incentives, highlighting key areas of opportunity and emerging challenges across the industry. Legacy tax credits under Sections 48 (ITC) and 45 (PTC) that cover solar, wind, fuel cells, clean fuels, carbon capture, and nuclear generally benefit from enhanced provisions or remain stable. In contrast, incentives tied to Sections 48E and 45Y for solar and wind, along with credits for electric vehicles and residential solar, face mounting challenges.

Key considerations that could impact project development timelines and financing strategies include:

• The scheduled phaseout of tax credits for core technologies
• Pending Treasury guidance on start-of-construction rules and definitions
• Strict Foreign Entity of Concern (FEOC) requirements

Start of Construction: Market Strategizes Amid Pending Guidance

FEOC: Rising Compliance Risk Impacts Capital and Procurement Strategy

Project Finance Impact

• CRC-IB expects solar and wind to remain primary areas of focus for tax capital investors in the near-term, particularly for projects that qualify for start-of-construction status or meet the 2027 placed-in-service deadline.
• Tax capital investors will expect sponsors to closely track start-of-construction activities and expenditures, supported by third-party verification and sponsor representations. The additional red tape created from required diligence of start-of-construction and FEOC compliance may extend financing timelines.
• As developers work to safe harbor projects under precedent start-of-construction Treasury guidance, tax capital and project finance deal activity is likely to increase in the near term. However, investor and lender capacity may become constrained by the volume of safe-harbored projects in the market, leading to stricter requirements around project quality, scale, and sponsor relationship.
• Tax capital investors are expected to continue prioritizing hybrid tax equity solutions, which allow for all or a portion of the tax credits to be sold to a third-party buyer, to preserve tax capacity. Preferred equity and credit buyers can offer financing solutions for projects unable to access traditional tax equity.
• There is still a large market demand for storage and other technologies – including carbon capture, RNG, clean fuels, fuel cells, geothermal, and nuclear – which are well-positioned to help fill any gap left by solar and wind post-2027.

M&A Impact

• Investors may take a more cautious approach to acquisitions until further guidance is released and the full impact of the OBBB becomes clearer.
• Sponsors and IPPs are using this period of dislocation to strategically position for future growth. A growing number of developers are actively safe harboring equipment – purchasing and storing inverters, panels, and other key components – to preserve project eligibility and secure timing advantages for federal tax credits. This strategy has emerged as a key lever for developers navigating delays, cost pressures, and policy uncertainty.
• Merchant curve forecasts will play a critical role in the near term as developers of early-stage, uncontracted assets evaluate whether projected price increases from the OBBB can offset rising equipment and interconnection costs and preserve project viability.
• Pre-NTP assets that have revenue contracts will likely require re-pricing in coordination with the offtaker or toll provider.
• Later-stage development and operating assets are expected to remain in high demand, as they offer a de-risked approach and are well-positioned to capitalize from rising price forecasts.
• CRC-IB anticipates significant industry consolidation as a means to accelerate asset deployment. Well-capitalized buyers will likely hold a competitive advantage in what is shaping up to be a buyer-friendly market.
• Asset M&A processes may experience pricing volatility and widening bid-ask spreads as buyers account for execution risk, equipment pricing, and potential shifts in capital markets. We expect a near-term rush to safe harbor qualified assets, with buyers able to meet start-of-construction thresholds holding a significant competitive advantage.
• Looking ahead, we expect asset owners and project developers to shift away from aggressive “land grab” tactics, focusing instead on maturing their backlog and advancing existing projects that can qualify for safe harbor.
• Private capital remains a bedrock of sector activity. Structured capital solutions continue to support M&A by helping bridge valuation gaps and unlock liquidity.

CRC-IB’s Recently Completed Transactions

References

1. Infralogic Global and Regional Rankings 1H25 by Deal Count, July 18, 2025