Posted on July 23, 2025
The new federal budget law narrows tax credits for wind and solar projects. And new presidential actions could make them even harder to build.
The budget law Congress passed this month — termed the “One Big Beautiful Bill” — took another swipe at the offshore wind industry, limiting substantial Biden-era tax credits that would allow wind developers to save or recoup hundreds of millions of dollars to build their projects.
Days after its passage, President Donald Trump signed an executive order aiming to further restrict access to these tax credits for renewable energy projects. And last week, the Interior Department issued a memo adding cumbersome review procedures for wind and solar.
Trump’s order directs the Treasury Department to issue guidance and take action next month. Experts are not sure what that will look like, but these recent Congressional and executive actions could imperil two Massachusetts offshore wind projects: New England Wind and SouthCoast Wind.
Much like Trump’s day-one memorandum freezing offshore wind permitting, experts say, the impacts will depend on what stage a project is at relative to construction. For pending projects, they could be enormous.
“The abrupt termination of credits and the additional tangle of rules imposed on these credits could be quite devastating,” said Seth Hanlon, a senior fellow at the Tax Law Center at NYU Law.
Here’s what a rewriting of tax credits means for wind projects
President Joe Biden’s historic 2022 climate law, the Inflation Reduction Act, or IRA, spurred investment and buildout in the offshore wind industry and the wider clean energy sector.
It earmarked more than $360 billion for credits, loans and grants. The Oceantic Network, an industry organization, said the IRA was the “single most important piece of legislation yet passed to accelerate the adoption of offshore wind energy in the U.S.”
The credits were scheduled to phase out in 2032. But the new Trump budget law not only phases the subsidies out completely in 2030, it gives projects a new deadline to begin construction if they want the subsidies: July 4, 2026. If they start later, they face an even tighter deadline to finish: they must be operational by the end of 2027 to get the subsidies.
“Everything was going along swimmingly until this new legislation, which really accelerates the process by which projects have to start construction,” said John C. Crossley, a renewable energy attorney at K&L Gates.
It gets more complicated: the IRS defines the “beginning of construction” in two ways. First, a project can be considered “started” if the developer spends at least 5% of the project’s total cost. The second option is for the developer to undertake physical work of a “significant nature.” That can look like the construction of turbine foundations.
Under the longstanding IRS language, either one counts as starting construction.
But it’s these longtime definitions — these options for developers — that Trump is targeting through his recent executive order seeking to bring “an end to years of subsidies.” He has directed the Treasury Department to revise existing guidelines to “ensure that policies concerning the ‘beginning of construction’ are not circumvented.”
He has also ordered the department to restrict these “broad safe harbors unless a substantial portion” of the facility has been built.
The guidance coming in August from the Treasury could, for example, increase that 5% minimum, or establish higher burdens to meet the “significant nature” standard, experts say.
Crossley said the language of the executive order is plainly at odds with longstanding statutory language, and that it’s unclear how much the new Treasury Department guidance will deviate from existing definitions.
“I think the question is, are they going to depart from those well-established definitions, or simply enforce existing law?” echoed Hanlon, who previously served as the former deputy assistant secretary for tax and climate policy for the Treasury Department.
“Clearly a faction is pushing for even more rapid phaseout,” said Matthew Eisenson, an attorney and senior fellow at the Sabin Center for Climate Change Law at Columbia University, of the executive order. “Is the Trump administration trying to accomplish through executive agency action what they couldn’t accomplish through Congress?”
To carry out the recent executive order (and others on renewable energy, like the permitting freeze), the Interior Department last week issued a memo on new review procedures for wind and solar projects. It ordered that nearly 70 “decisions, actions, consultations, and other undertakings” require the approval and review by Interior Secretary Doug Burgum’s office.
This includes lease sales, biological assessments and opinions, compensatory mitigation plans, and construction plans.
“In stark contradiction to the Administration’s commitment to tackling bureaucracy, this directive adds three new layers of needless process and unprecedented political review to the construction of domestic energy projects,” said Jason Grumet, CEO of the American Clean Power Association, which represents renewable energy companies.
“The Secretary of the Interior will apparently now be personally reviewing thousands of documents and permit applications for everything from the location and types of fences to the grading of access roads on construction sites across the country,” Grumet said in a statement.
A former Interior Department official who reviewed offshore wind projects also sees this added level of review as political, telling The Light it will create more obstacles that will slow project progress even more.
“They are putting roadblocks in for things they don’t like,” said the former official, who spoke on the condition of anonymity.
In a press release on the memo, an acting assistant Interior secretary said the actions will help tackle the “Green New Scam,” referring to wind and solar projects.
Previously, evaluations or actions (like approvals) were typically delegated to experts and specialized offices within an Interior agency or cooperating department agencies, like the Bureau of Ocean Energy Management or NOAA Fisheries.
The former official said the ability of people in the secretary’s office to digest and review these technical documents, which are often hundreds of pages, is quite limited.
Offshore wind projects
What it means for Massachusetts
Massachusetts has three offshore wind projects in the works, all at different stages.
Vineyard Wind is well underway with construction and is expected to be completed by next year, so the new tax credits timeline has no bearing on it.
But New England Wind and SouthCoast Wind, both of which plan to use union labor and invest in the Port of New Bedford for either staging or long-term project operations, now face more uncertainty and risk.
Five projects on the East Coast are currently under construction and should be eligible to receive the tax credits, said Eisenson. Those projects are Vineyard Wind, Revolution Wind and Sunrise Wind (all south of New Bedford); Empire Wind in New York; and Coastal Virginia Offshore Wind.
“But for those other projects that have not commenced construction, like the New England Wind project, there’s the question of whether they’ll be able to commence construction or be operational” by the new deadlines, he said.
Tax credit deadlines for offshore wind projects
New England Wind
New England Wind, Avangrid’s second project planned for Massachusetts (after Vineyard Wind), is fully permitted, but it still needs a state contract to purchase the project’s power.
Its construction start date is unknown, and minimal information is available on the project’s website. An Avangrid spokesperson declined to answer questions or provide comment.
Project construction typically begins on land and in state waters, where the transmission cables from the offshore towers come onshore and connect to a substation.
The staging terminal in Salem that will be used to marshal the project’s major turbine components for offshore construction is still being built.
In April, the 42-acre site in Salem was largely an empty field, WBUR reported.
A spokesperson for Crowley, which is developing the terminal, told The Light last week that the site is anticipated to be operational in 2027.
“As we do with all the industries we serve, we are actively monitoring policy developments while continuing to work with our customers and partners to deliver the best outcomes possible,” said the spokesperson in an email. “Crowley is committed to building and operating a terminal that meets the needs of the industry and the expectations of our partners — the Commonwealth of Massachusetts, the City of Salem, and the broader community.”
Though it intends to stage out of Salem, New England Wind plans to house its long-term operations and maintenance hub in New Bedford at the under-construction Foss terminal. The Danish company, Liftra, also plans to build a crane manufacturing facility in the city, but it’s all contingent on the project moving forward.
The company in a September 2024 press release said if a power purchase agreement is achieved, project construction could begin in 2025 with full commercial operation in 2029. That purchase agreement has been delayed, again, to December.
If Avangrid is waiting to have the power agreement in hand before starting construction, and if that agreement is tentatively secured in December, then the company would have about half a year to start construction in order to secure tax credits by the new July 2026 deadline established in the budget law. (But again, new Treasury guidance could alter that timeline.)
Starting construction before getting that agreement in hand would be a risky decision.
Speaking generally, Eisenson said it would be hard for a developer to justify construction to shareholders with no guarantee it will be able to complete the projects and secure a revenue stream, which would come from the state and its ratepayers.
SouthCoast Wind
SouthCoast Wind is further behind. It still needs three federal permits (and the state power contract) before it can start construction. Amid the federal freeze set by Trump’s day-one presidential memorandum, those permits have been stuck in a limbo with no known end.
Last year, before Trump was elected and took actions against the industry, the project’s website said it expected to deliver power “by the end of the decade.”
But the company’s CEO Michael Brown last month said power delivery is delayed at least two years, to 2032, and warned of significant challenges for the project as long as the freeze continues.
SouthCoast Wind declined to answer questions on potential impacts and the project’s timeline.
The project plans to lease the New Bedford Marine Commerce Terminal after Vineyard Wind.
MassCEC, which operates the property, earlier this year told The Light that SouthCoast Wind’s lease is not set to start until 2029 — well after the truncated tax credit deadlines pass. This could mean the project loses out on hundreds of millions in federal support.
SouthCoast Wind also plans to become a tenant at the under-construction Foss terminal for long-term operations.
“Any time you shorten the time window, it’s a concern,” said Andrew Saunders, president of the New Bedford Foss Marine Terminal. “But we need to deal with that shortening of the window, and if we need to edit our business plan to adapt to this, we will do that.”
In other words, the terminal would pivot to working more with non-wind businesses, something it has already been doing. Saunders noted that per the company’s agreement with the city, it can use the property for any offshore “alternative energy” projects.
Mayor Jon Mitchell told The Light that the city is ready to help advance projects, even within this “narrow time frame.” He hasn’t connected with Avangrid representatives since the legislation and executive order, but said they are “very close” to getting New England Wind moving.
“We’ve resigned ourselves to not see a robust pipeline for the next few years,” said Mitchell, remarking on the “active hostility” of the Trump administration toward wind energy, “but will stay ready to compete once that pipeline starts to firm up again.”
Massachusetts ratepayers may be on the hook
New England Wind and SouthCoast Wind both require a finalized power purchase agreement with Massachusetts utilities, which has been delayed due to uncertainty created by Trump’s wind memo. In June, the state’s deadline to execute contracts with the developers was pushed again, this time to December.
The agreements will ultimately establish the price for ratepayers, something likely to go up due to the cuts to IRA funding, because the projects will cost more to build, experts and officials say.
“President Trump’s new law will significantly increase customer energy bills, disrupt critical energy projects needed to meet rising demand, and cost hundreds of thousands of jobs across the nation,” said Massachusetts Energy and Environment Secretary Rebecca Tepper in an email. “Our administration is working hard to lower energy costs for people and businesses, but President Trump and Congressional Republicans are taking us backward.”
Tepper’s office is still contemplating the impacts of the recent executive order, but cited a business association that states the new budget law may cause an estimated 6% increase in household electricity costs.
Amy Boyd Rabin, vice president of policy at the Environmental League of Massachusetts, said the budget law will make it “a lot more expensive and a lot harder” to adopt clean energy infrastructure.
“Fewer solar and wind storage projects will be built, and that is going to make our energy bills more expensive,” she said. “Massachusetts and Massachusetts people and companies have made substantial investments in building a clean energy economy. And that money and those jobs will be lost if those plans can’t come to fruition.”
Eisenson said the Trump administration is taking a “belt and suspenders approach” to knocking offshore wind down, to the detriment of ratepayers.
“They are trying everything they possibly can to get in the way of offshore wind development,” said Eisenson. “They’re trying a freeze on federal permitting, they’re issuing [a] stop work order, they’re pulling air permits, and now they’re making investment tax credits substantially harder to use.”
“It can be hard to say what the incremental impact of each of these things is, but unwinding each and every policy is harder than unwinding just one bad policy,” he continued.
The 45-day clock for the Treasury to issue revised guidance, which could further narrow these construction windows and tax credit options, started on July 7.
“It’s creating a chilling effect, and we don’t know how cold it’s going to get until we see the end result,” said Crossley on the forthcoming guidance. “The uncertainty doesn’t do anyone any good.”
