Public agencies across the country woke up on July 5 to a dramatically altered energy landscape. President Trump’s signature on the One Big Beautiful Bill Act (OBBBA) the day before didn’t just reshape federal spending; it shortened years of energy planning into months of urgent decision-making.
For the thousands of public agencies that have been methodically planning solar installations, fleet electrification, HVAC modernizations and building efficiency upgrades, the question is no longer “when should we move forward?” but “can we move fast enough to capture federal incentives before they disappear?”
1. What the One Big Beautiful Bill Act Actually Does: Different Deadlines for Different Technologies with an Emphasis on Domestic Suppliers
The legislation dramatically alters the timeline for federal energy incentives established under the 2022 Inflation Reduction Act (IRA). Technologies that previously had support through 2032-2033, or in some cases permanently, now face much tighter deadlines.
Solar, wind, electric vehicle and energy efficiency incentives that were originally available through 2032-2033 now face deadlines as early as 2025-2027, effectively accelerating their phase-out by five to seven years. Meanwhile, energy storage, geothermal, nuclear and hydropower projects retain their original timelines through 2033-2034.
Even if the timelines can be met, strict “Foreign Entity of Concern” (FEOC) rules are also in play. Partial use of components from those entities may disqualify projects unless domestic content thresholds are met.
- Solar and Wind Projects (Section 48E): Projects must begin construction by July 4, 2026, to maintain a four-year completion window. If that deadline is missed, projects must be placed in service by December 31, 2027. In this case, “beginning construction” doesn't mean board approval or permits; it requires either physical work of a significant nature at the job site, such as installing racks or structures to support solar panels or paying for at least 5% of the project’s total cost. Any solar or wind project that begins construction after December 31, 2025, must also comply with the FEOC rules.
- Commercial Electric Vehicles (Section 45W): Agencies now have until September 30, 2025, to purchase qualifying vehicles to receive tax credits.
- EV Charging Infrastructure (Section 30C): Projects must be placed in service by June 30, 2026.
- Energy-Efficient Buildings (Section 179D): Construction must begin by June 30, 2026, to maintain deductions that were previously permanent in the tax code.
- Energy Storage, Geothermal, Nuclear, Hydropower: These technologies retain their original federal support timelines through 2034.
Adding to the urgency, President Trump signed an executive order on July 7 directing the Treasury Secretary to tighten construction requirements within 45 days. The new guidance will require “substantial progress” rather than simply beginning work, potentially making it even harder for projects to qualify.
2. Impact on Public Agencies: Every Month Matters
Major energy infrastructure investments are already driven by practical necessities rather than federal incentives alone. Aging infrastructure means higher utility bills and decreased quality of air, temperature control and comfort for students, staff and residents. Federal incentives are valuable, but the One Big Beautiful Bill is a reminder that hedging against utility cost increases that have risen 2-3 times faster than inflation will still deliver net savings even without federal support.
If support is what they’re after, public agencies with aging facilities must expedite their critical infrastructure improvements to leverage federal incentives. These agencies must now accelerate HVAC, lighting and building efficiency projects that lose their federal Section 179D support after June 30, 2026. Water districts operating energy-intensive treatment plants with specialized pumps and aeration systems, community college campuses with multiple buildings requiring coordinated upgrades, and cities with numerous fire stations, libraries and administrative buildings all previously relied on permanent federal deductions for energy-efficient improvements.
The shortened timeline from “permanent” federal support to a June 2026 deadline creates urgency for public agencies to accelerate project timelines. With California commercial and residential IOU customers spending an average 90% more on their utility bills than in 2013, agencies that can successfully navigate these new deadlines will capture significant savings, while those that delay face higher project costs and continued exposure to rising energy expenses.
3. Strategic Silver Linings: Opportunities Within the Chaos
Despite the challenges, forward-thinking agencies are identifying opportunities within the new framework. Energy storage projects retain full federal support through 2034, making battery installations increasingly attractive for agencies seeking long-term budget relief. Unlike solar projects, storage systems can still access federal incentives with reasonable planning horizons. Geothermal Projects also maintain their full 30% credit through 2034, offering another pathway for agencies with suitable geography and long-term energy planning.
Municipal Bond Expansion represents a lesser-known but significant win in the legislation. The bill expands tax-exempt private activity bonds for energy efficiency, school retrofits and resiliency projects, raising caps on bond insurance and expanding eligibility. This gives agencies additional financing tools to bridge federal funding gaps.
Accelerated Depreciation remains permanently at 100%, supporting projects like energy storage, fuel cells, linear generators and some energy efficiency improvements. This provision allows agencies working with private sector partners to deduct the full cost of eligible technologies in the first year, providing additional tax benefits.
State and Utility Programs continue offering substantial incentives that can help offset reduced federal support. The California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA), California Energy Commission (CEC) and California Public Utilities Commission (CPUC) programs, along with utility rebates, provide alternative funding pathways for strategic agencies.
Further, as agencies delay projects due to the policy changes, fast-moving agencies may benefit from reduced competition, and in-turn gain better access to contractors, equipment and permitting resources.
4.The Path Forward: Act Now or Pay More Later
Successful agencies will rapidly assess their exposure, prioritize high-impact projects and accelerate timelines without sacrificing quality.
Immediate Steps:
- Inventory all energy projects and their federal incentive dependencies
- Assess which projects can meet new deadlines and financial exposure if funding disappears
- Evaluate shifts to energy storage or other qualifying technologies that retain federal funding support
- Determine how foreign content sourcing affects eligibility and whether project financing can still move forward under the new rules
Medium-Term Steps:
- Fast-track approvals, permitting and contractor selections for priority projects
- Consider bundling multiple projects for economies of scale
- Explore alternative financing through municipal bonds and state programs
Ongoing Strategy:
- Develop contingency budgets for projects that may lose federal support
- Build relationships with state agencies managing alternative incentive programs
- Partner with experienced energy service providers who can navigate timeline challenges and optimize available incentives
- Smartly identify other funding sources from the State, utilities, private funding, etc.
The bottom line is that federal timelines are significantly shortened, while the fundamental drivers for energy infrastructure investments remain strong. Aging systems create inefficient operations and higher utility costs, plus poor comfort conditions for occupants, making modernization essential regardless of federal policy. Agencies that act decisively can still capture federal incentives while securing long-term protection against escalating utility costs. The clock is ticking, but the strategic incentive and motivation to modernize energy infrastructure — with or without federal incentives — has never been clearer.
Authored By:
Thomas Jackson
Corporate Vice President
Major Projects — Climatec Energy
A Robert BOSCH Company
