Clean Energy Groups Request California Policy Changes after Federal Tax Credit Cuts
Clean energy industry groups asked Governor Gavin Newsom and California legislative leaders to make policy changes to assist clean energy projects after the recent cuts in federal energy tax credits. The group, which includes solar and wind energy representatives, requested that the legislature and the governor “use all available tools at your disposal to maximize remaining federal incentives and improve energy affordability for all Californians.”
The One Big Beautiful Bill Act and President Donald Trump’s subsequent executive order require energy projects that begin construction after the bill was signed into law on July 4, 2026 to be in service by December 31, 2027 to qualify for the full energy tax credits. In California, the letter noted, the process for completing permits, environmental review, and interconnection exceed that timeline.
“Taken together, the new federal landscape creates a serious risk of delay or cancellation for dozens of utility-scale solar and wind projects across the state, threatening jobs, reliability, and progress toward California’s clean energy targets,” the groups wrote. The groups requested a “coordinated action plan to stabilize California’s clean energy market and maximize the availability of remaining federal incentives.”
The group offered five recommendations:
Procure clean-energy from new sources to help projects meet deadlines: The groups recommend directing the California Public Utilities Commission to determine if there are any “tax credit-eligible projects in the interconnection queue” that need procurement contracts. “With additional procurement needed to meet growing demand, the state should move quickly to enable more projects to begin construction under the existing Treasury guidance and capture the cost savings for ratepayers.“
Streamline environmental review: The groups also recommend that California “streamline environmental review for clean energy projects so they can be placed in service ahead of the tax credit cliff.” The letter notes that “[u]nnecessary CEQA delays drive up project costs and pose a significant risk to meeting the new timelines for tax credit eligibility.”
Reduce land-use barriers: The groups recommend reducing “land-use barriers to siting renewable energy projects, including by facilitating farmers’ ability to convert water-scarce agricultural land to renewable energy production.”
Expedite state permit approvals: The recommendation for expedited project approvals includes projects seeking certification under AB 205’s opt-in pathway at the California Energy Commission.
Conform to IRA tax credits: The groups recommend that the state conform to tax provisions in the Inflation Reduction Act “that reduce financing costs for projects that utilize transferability and provide direct savings to ratepayers.”
Representatives from the Large-scale Solar Association, the California Energy Storage Alliance, American Clean Power California, the California Wind Energy Association, and the Solar Energy Industries Association signed the letter.